Unfiled Taxes and Back Taxes—The Back Tax Trap
The Back Tax Trap
We had a call today from a nice enough fellow. We got to talking about his tax problems and about the fact that the IRS was sending him letters about the remaining money he owed for 2006. As we talked, I was disheartened to find out that he had fallen into the classic back tax trap. Because of the fact that he still owed the IRS money from 2006, he has now failed to file for 2007. His logic is sound enough. If I can’t pay what I already owe, why file this year to let the IRS know I owe them even more that I can’t pay? But what the IRS sees is yet another violation for which they can tack on even more penalties and interest. What that means is that he now has the old problem with delinquent tax payments and a new, potentially larger problem with an unfiled tax return.
Don’t Let the IRS Bully You into Not Filing Your Tax Return
No matter how much you owe in back taxes, never let IRS tactics scare you away from filing your current tax return. Not filing can become a trend that digs you deeper and deeper into a hole. This is also a problem that will not go away on its own. Even more important, the IRS will not deal with you until you are current with all tax returns, regardless of what you owe. The lesson here is to file your return whether you can pay or not. No matter what the situation, always file a tax return.
What to Do From Here
So you’re saying, great Pat. I read this too late. What do I do if currently have past-due tax returns that I haven’t filed? The answer is easy. I’ll tell you exactly what we told the gentleman on the phone earlier. You have to get all those past-due returns in order before you can do anything else with the IRS.
TaxMasters Can Help
We see people regularly with three to five years of tax returns that haven’t been filed. Even up to ten or so years isn’t that unusual. One of our strengths is that we’re really good at getting people with past-due returns back into compliance. We have even successfully helped one specific taxpayer who had almost 40 years of unfiled returns.As always, TaxMasters is here to help. Call our tax professionals today at (866) 694-4018 or go to www.txmstr.com and let us get between you and the IRS. We can help you file past-due returns and help you find ways to pay delinquent taxes with fewer penalties. We are here to help.
Until you need us,
Pat Cox
This is good info Pat. I did have a question. I have a friend who owned a business for about 10 years and has not filed a tax return for about the last 5 years because of financial difficulty. The business is basically closed now and he is working with creditors, although he has no assets except his house which is mortgaged. He has not filed or made a payment to the IRS for years and I don’t think they have contacted him as of today. Clearly, he would owe a lot of back taxes. I am wondering if he should proactively contact the IRS or wait until they come looking for him?
Scott,
It is never a good idea to wait for the IRS to contact you. On the other hand, it may damage your chances at getting a settlement if you contact the IRS directly and say the wrong things. The best thing your friend can do in a situation like this is to call us and talk to one of our tax consultants about his/her options. It will cost money to fix this porblem, but Tax Masters is very good at saving our clients money in the long run. This is a bread and butter job for us. Send your friend a link to this post and have him call us today at (866) 694-4018. He’s in trouble and it sounds like he needs some IRS tax relief whether he knows it yet or not.
Patrick Cox, Tax Masters