Robert Loe CPA

Past due and non-filed income tax returns

How did I get here?

As you are probably aware, the IRS takes a dim view of those who don’t file their income tax returns.  There are many reasons why a person can get behind in filing.  Here are a few:

  • Too busy. Not enough time to complete the forms.  I’ll catch up later.
  • Didn’t have the money-I’ll get around to it when I do.
  • Complexity-Who can understand the forms?
  • Don’t like the process. What right do they have to make me file anyway?  Isn’t the Income Tax against the constitution?
  • A family member was ill so I was not thinking about taxes.
  • I went through a dissolution or other domestic crisis so I was distracted.
  • Don’t have the records, so I can’t file an accurate return.

What are the reasons why you should consider filing your past due returns?

  • The IRS doesn’t care why you didn’t file. Filing the returns before the IRS becomes aware of your delinquent situation is easier than waiting until they do.
  • Expecting a refund? The right to claim it, along with other credits, expires after three years.
  • It may prevent the IRS from filing a substitute return on a your behalf, which will not reflect exemptions or deductions that you may be entitled to, and will not stop interest and penalties from accruing. This substitute return allows the IRS to start the process of collecting the unpaid tax, interest, and penalties, which can result in levies on wages, other income, bank or retirement accounts, as well as seizure of assets.  Criminal penalties may be up to one year in jail – for each unfiled tax return.  Yikes!   This is something you want to avoid.
  • Failure to file income tax returns will result in lower Social Security benefits upon retirement.
  • Timely filing of income tax returns will result in your greater ability to obtain mortgages, business loans or financial aid for higher education.
  • The IRS assesses penalties for failure to file and failure to pay, and charges interest on any unpaid tax balance.

What can I do?

The best thing to do?  Filing the delinquent returns as soon as possible stops the failure to file penalty from accumulating (5% per month, up to 25%).  Once all returns are filed, the taxpayer may be eligible to set up a payment plan for unpaid tax amounts, which may include the abatement of interest and penalties.  In some instances an offer in compromise may allow the tax debt to be settled for less than the amount owed.  There is hope!

Once you start the process of dealing with your unfiled income tax returns that queasy feeling you have whenever you think about the subject will start to go away.

If you’d like to get current with your tax filings but have no idea where to start, give us a call.  Robert Loe & Associates can assist you in obtaining years of missing data, prepare delinquent tax returns, and work with the IRS on your behalf to achieve the most positive possible outcome – so you can get on with your life.  What are you waiting for?

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