The absolute worse thing you can do is wait for the IRS to prepare your returns for you because they prepare the returns assuming standard deductions and no dependents resulting in the highest tax liability possible.
In addition, failure to file returns is illegal and subject to criminal and civil penalties. This means that you can go to prison, pay substantial penalties and be financially destroyed. Willful failure to file returns can result in a punishment of one year in jail and a $25,000 fine ($100,000 in the case of a corporation).
The IRS is looking for all taxpayers who have not filed returns. If you have previously filed returns, have a savings account, earn dividends and interest, wages or salary or have any other form of income, the IRS has a record of it. They know you exist and you will soon begin receiving notices from them. If they do not hear from you, they will prepare tax returns for you based upon the information in their database and you will have a very short time to protest the assessment.
The first step is to contact a tax professional and have all of your unfiled returns prepared and filed immediately. Once the returns have been prepared and filed, the tax professional will seek to resolve your tax liability and get you back into good standing with the IRS.
I haven't Filed my Tax Returns
For various reasons, you may not have filed your federal income tax return for this year or previous years. You may not have known whether you were required to file. You may not have filed because you owe additional tax that you cannot afford to pay in full. You may not have filed because you expect a refund and just have not taken the time to complete the return.
Regardless of your reason for not filing, you should file your tax return as soon as possible. If you cannot pay all of the tax due on your return, you may be able to arrange payments, an ""Offer in Compromise"", or ""Currently Not Collectible"" status, depending on your situation.
Failure to file your return on or before the due date may result in penalties and interest. However, if you filed on time but did not pay in full, you will be subject only to the failure to pay penalty. Interest is charged on taxes not paid by the due date, even if you have an extension of time to file. Interest is also charged on penalties.
You may be surprised to learn that filing your tax returns can be the quickest way out of tax trouble. Gather your tax documents. If you are missing some a tax representative can assisst you with obtaining them.
We can help you create a plan for how you will pay off your tax debts. You may need to consider an Offer in Compromise (OIC). We will help you with a plan to protect yourself from an IRS investigation, assessment, levy, or lien. It requires patience, good judgment, the ability to talk courteously with the IRS, and the advice of a competent, experienced tax professional. Have an Enrolled Agent or CPA file your taxes as soon as possible.
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