Unfiled Tax Returns:The Facts

You need to know that interest and penalties are accumulating if you haven’t filed your tax returns because you can’t settle them. This IRS issue should be settled, so look for a way.

Not filing your tax returns is worse than filing them late and owing the IRS tax debt. It is a felony if you do not file a tax return and you owe taxes but there’s no criminal penalty if you file but cannot settle your taxes. You could be sentenced to one year in prison and/or fined up to $25,000 each year for every unfiled year if you continue to not file your taxes.

The IRS uses its computerized Information Returns Program (IRP) to match up W-2’s and 1099 income reports to determine if people have filed a tax return. This tool is very efficient. Before the IRS knows that you haven’t filed your tax return, get organized and get it done!

Filing Your Return

• Gather all documents together. Get your W-2�s and other papers together. If you determine that there are documentation missing, request duplicates from the IRS.
• Prepare your tax returns. Get a tax professional or do it yourself. A tax professional can be available to answer any questions and deal with the IRS when needed.
• Know all about tax refunds. An unfiled tax return might still have a tax refund. You need to be aware of the time limit for refunds and also be prepared to have the IRS utilize this refund for settlement toward your tax bill.
• Fully settle your tax debts. You should prepare a plan to let you settle your tax debts. Cooperate with the IRS and obtain advice from a tax professional to protect yourself from an IRS probe. You’ll have to qualify for an Offer in Compromise or an installment agreement. Your IRS issues will go away with a good plan.
• Future planning is important. Evaluate your tax situation with a tax professional and plan strategies that will minimize your taxes and help you reach your economic goals.