Unfiled Tax Returns

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As we all know, there are only two certainties in life—death and taxes. Why? Supreme Court Justice Oliver Wendell Holmes put it well, "Taxes are what we pay for a civilized society." Still, for some, paying taxes can feel more like a burden than a duty. While most Americans do manage to make the April 15th deadline each year, some may find themselves struggling to make the deadline for a number of reasons—especially if they owe the IRS, but are in no position to pay. Other reasons for not filing a tax return can be emotional, confusion or even blatant procrastination, but whatever the case may be, understand that not filing can only cause more problems for you.

If you haven't filed your income tax return by the due date, don't panic. There are several options available to you to help you avoid the numerous problems, penalties and interest associated with filing late, or not at all. If you cannot file your return by the April 15th deadline, you may qualify for an extension to file. The extension does not, however, give you an extension to pay your tax liability. You may apply for an automatic six-month extension of time to file by filing Form 4868, the "Application for Automatic Extension of Time To File U.S. Income Tax Return." Also, a taxpayer who is filing late may be able to qualify for a payment plan, an Installment Agreement, or an Offer In Compromise. If the payment plan is approved, then you will be required to continue compliance with all filing and payment responsibilities.

In some cases, the IRS will file a substitute return on behalf of the taxpayer. These returns do not typically include exemptions or expenses a person may be entitled to. If this happens, it's best to file your return as soon as you discover that a return was filed on your behalf. Keep in mind that if you are entitled to a refund, you have only three years to claim it. After the three-year period expires, the money becomes the property of the United States Treasury Department.

If a taxpayer continues to not file their returns and does not respond to any IRS requests for one, there are a variety of enforcement actions that they may be considered for. Criminal prosecution and additional penalties could be applied to repeat or flagrant non-filers. The willful failure to file a return can call for a punishment of one year in jail as well as a $25,000 fine for an individual and a $100,000 one for a corporation.
If you are in a situation where you haven't filed a tax return for several years or so, again, don't panic. But do keep in mind that the IRS will eventually contact you, even if it's several years down the line. The best thing you can do for yourself is to contact a tax professional, an attorney or the IRS for assistance at 800-829-1040 (Individuals) and 800-829-4933 (Businesses). The IRS can discuss options, including payment plans, and also provide the necessary information needed to file your delinquent returns.

A tax attorney can offer a variety of solutions to your tax problems, including protection from liens and seizures, as well as wage garnishment. Likewise, the insurmountable abate penalties added to your tax debt can be cleared up by a qualified attorney. Unlike most tax offenders, tax attorneys can present your reasons for your tax difficulties, presenting a valid argument why penalties should be reduced or removed. It is common for tax attorney clients to contact firms before the IRS contacts them. If you know you have not properly prepared your taxes, even if the IRS has not come after you, it is a good idea to contact a tax attorney.

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