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Unfiled Tax Returns

I haven't filed in several years. Should I file?

Yes. You should file. There are several other good reasons to file tax returns. This includes:

Filing tax returns and paying the tax due or negotiating a settlement of the tax due is good citizenship and our obligation in this country.
Failing to file returns can jeopardize your future. You can go to federal prison and have your assets seized. If you file before the IRS gets to you, this is resolved without fear of criminal problems in most cases.
You cannot get student loans, buy a house, refinance a house, or get credit from most lenders and credit card companies.
Social Security retirement and disability benefits can be seized at a time when you can least afford to loose the income.
Social security and Medicare are all computed based on a person's lifetime earnings. Some of this is only reported to the IRS on your tax return.
State benefits such as unemployment compensation are also based on reported income.

The IRS has improved its database of income transactions and increased its ability to identify people who have not filed their tax returns. They are hiring more agents each day to go find the people who have not filed. If you file before they get to you, you will normally be able to resolve your problem relatively painlessly.

If you wait for the IRS to contact you, the cost of the additional penalties and potential criminal problems can escalate rapidly.

Eventually, they will get you. By that time, however, the original tax bill will be multiplied many times by interest and penalties.

The IRS also has a wide range of civil and criminal penalties available that can be imposed on persons who fail to file returns as well. Not filing, or filing a false return is a FEDERAL CRIME. (They get really fussy over this.)

Substitute for Return Program

The law allows the IRS to file a substitute return for people who do not file – in other words, the can guess at your income and demand tax payment on the basis of that guess. A few letters are sent first. The IRS then proceeds with filing a tax return for you that assumes you have no deductions or expenses!

If the IRS has already filed a substitute return, it is not to late for the tax professionals at TaxMasters to obtain a correction to claim any additional deductions and refunds you may be due.

Statutes of Limitation

Another reason to file is because the clock is running on any refunds due. In cases where a return was not filed, the law provides most taxpayers with three-years to claim a refund. If no return is filed to claim the refund within the three years, the money becomes the property of the U.S. Treasury. (yoink!) After the statute has run, not only does the IRS keep the refund check, they will not apply any credits, including overpayments to other tax years that are owed.

On the other hand, the statute of limitations for IRS to assess and collect any outstanding balances does not start until a return has been filed. In other words, there is no statute of limitations for assessing and collecting the tax if no return has been filed.

Once a return has been filed, the IRS has ten years to collect the tax. If the tax is not collected in this time, and the IRS or the taxpayer have not acted to extend the statue of limitations, the IRS' ability to collect the tax expires. (Amazingly, it happens pretty often if you have the right help to plan for this.)

What should you do?

So, what should a person do who has one or more unfiled federal tax returns? They should Call the tax professionals at TaxMasters, (800) 581-0456 NOW!, and get the delinquent returns filed.

Worried about owing the IRS? Don't. Anyone unable to fully pay their liabilities should not let that prevent them from filing. Many payment options and other alternatives are available. For more details, ask your Tax Consultant.