eTaxes.com is not the Internal Revenue Service

eTaxes.com

1534 Plaza Lane #253
Burlingame, CA
94010

Toll Free Phone
800.714.1880

eTaxes.com
Home

site search by freefind advanced

IRS Announces Major Changes to Offer Program

I Have to Sell My Home, But I Have a Tax Lien

IRS Taking Your Assets Now. If You Owe Taxes, Read This

How to Keep From Getting Ripped Off

Is This the Death of the Offer Program?

Can The IRS Seize My Property?

Steve Kassel in Washington Times Article 4-17-06

IRS Tax Lien & Levy

Avoid These Tax Scams

IRS Warning on Offer in Compromise Promoters

I Want To Sell My House, But I Have a Tax Lien

Stay Away from These Tax Resolution Firms

Respected Tax Resolution Firms

Free tax consultation

Offer in Compromise

Offer Article for NAEA

Other Tax Related Scams

eBay & Taxes

IRS Related Stress,
Don't Let it Destroy You

Can the IRS Collect Taxes Forever?

Steve Kassel in the Media

Who Should I Hire?

Should I Hire an Attorney?

Testimony on Capitol Hill

Payment Agreements

Can I File Bankruptcy?

Taxpayer Advocate Slams IRS Offer Program

I Haven't Filed & The IRS Filed For Me!

Can the IRS Take My Property?

Penalties & Interest

IRS Food & Clothing
Expenses

IRS Housing & Utility Expenses

IRS Transportation Expenses

Download IRS Forms?
433-A & 433-B

Get Copy of Your Tax Return, Extension or Any Other Tax Form

General Tax Questions

Tax Links & Other Stuff

Privacy Notice

Steve Kassel
in the spotlight:
Good Morning America
1999 Picture/Transcript

New York Times:
October 10, 1999
New York Times
July 20, 1999
New York Times
July 18, 1999
EA Journal
Nov-Dec, 1999

CNNfn.com:
August 4, 1999

Expert Witness

Meet the Staff of
eTaxes.com

 
site search by freefind advanced

eTaxes.com
Toll Free Phone
800.714.1880
 

We're NOT the IRS, but we do help people with IRS tax problems
Call the IRS at 800.829.1040

I Haven't Filed A Tax Return in Years,
What Should I Do?

Very often I get calls from individuals that haven't filed a tax return in years. Believe it or not, in 1992, I had a client who hadn't filed since the Kennedy Administration!

The first question I am usually asked is "Will I go to jail?" Except in very rare cases, no. What the IRS wants is for you to file the delinquent returns. It's possible that the IRS has already filed returns for you. Under section 6020(b) of the Internal Revenue Code, the IRS may file a Substitute for Return (SFR) when you don't file a return on your own. An SFR is usually not a good thing since it is calculated at Single or Married Filing Separate rates even though you may be qualified to file Married Joint or Head of Household. However, since the IRS has no return, they choose the highest tax rate, not the one you would choose for yourself.

The IRS also doesn't give you dependents you would ordinarily claim. If you have four children, it doesn't matter. Because the IRS files for you, you only get your own personal exemption. You also don't get the benefit of any itemized deductions such as mortgage interest, state or property taxes you paid, charitable contribution or health care expenses. Why? Because the IRS basically takes your income, taxes it at the highest rate, deducts any Federal tax you paid and that's that. And it can get worse. If you have 1099 (self-employed) income, you don't get any business expenses.

If the IRS has already filed an SFR, that isn't the end. While the law doesn't force the IRS to accept a return you file after an SFR has been done, I have never seen a case where the IRS hasn't accepted the return. Once the IRS accepts the return, the tax is reduced to what is shown, but of course, penalties and interest still apply. However, because the tax is reduced (often by a huge amount) the penalties and interest are reduced as well.

What about if the IRS hasn't filed a return for you? The same basic rules apply. Simply file a return just like any other one. If you don't have the information to file (W-2s, 1099s etc.), in most cases we can get the documents from the IRS. It takes up to 45 days, but the IRS usually has wage and withholding information going back at least seven or eight years.

For some of you, no records are available because no 1099s or W-2s were ever issued. This is often true for sole proprietors. In that case, hopefully you have records to show your income and expenses.  We'll also use bank statements if you have those available. Assuming that all of your income was deposited into your bank account, that is a good way to track your income, too. If you can't produce those records, all is not lost. I recommend that my clients "back into" their net income by estimating what it would have taken for you to meet your monthly expenses. For example, let's say that you have no records for 1995, but you know that your rent was $1,000 per month, you had a car payment of $200, insurance was $50, food and clothing averaged $300 per month, etc. We'll add up those monthly figures and multiply by 12. It isn't the greatest way to file a return, but it works in a pinch.

If you are due refunds, filing the returns will close your case. Under current law, refunds more than three years old are lost nor can they be applied to other tax due. If you owe taxes, penalties and interest will be tacked on. The failure to file penalty is a maximum of 25% of the tax due on each return. It is not unusual to see the penalties and interest exceed the tax due on returns more than 3 years old. In fact, if the taxes go back 10 years, the total may be 3 or 4 times the tax due. Yikes! For more information on your options, visit the payment agreement and Offer in Compromise pages.

You may also be wondering how many years back you should file. If you assume you should file ALL delinquent returns no matter how many years you haven't filed, you may be incorrect. In fact, the IRS often doesn't require that all delinquent returns be filed. For that, we look at Internal Revenue Service Policy Statement P-5-133 which addresses delinquent returns.

The statement states that "Taxpayers failing to file tax returns due will be requested to prepare and file all such returns. Where it is determined that required returns have not been filed, to the extent to which compliance for prior years will be enforced will be determined by reference to factors ensuring evenhanded administration of staffing and other Service resources."  Also included is the statement that, "Normally, application of enforcement criteria will result in enforcement of delinquency procedures for not more than 6 years."  However, there may be exceptions based on the level of non-compliance, when additional years are required for resolution.

In addition, if you contemplate filing an Offer in Compromise, you should be aware that ALL tax returns must be filed in order to be eligible for an Offer. If all returns are not filed (unless a return was not legally required to be filed) you cannot file an Offer.


eTaxes.com
1534 Plaza Lane #253
Burlingame, CA 94010


Follow eTaxes.com on Twitter


Toll Free 800.714.1880 
Phone 650.742.7700
Fax 650.240.1707

Request a Free Tax Consultation
 
We are NOT the IRS, but we do
help people with IRS tax problems
Call the IRS at 800.829.1040
or visit them at
IRS.GOV


All information is copyrighted by eTaxes.com & Steven H. Kassel 1999 through 2010
Last updated 10/29/2012 11:05:48 AM

We support Mazon-A Jewish Response to Hunger & the San Francisco Giants Community Fund and hope you will do the same

eTaxes.com specializes in Personal & Business IRS Tax Negotiation, IRS Offers In Compromise or "OIC", IRS Installment Agreements, as well as IRS Delinquent Tax, IRS Bankruptcy & IRS Collections Issues, IRS Payroll Taxes, IRS Tax Liens, IRS Wage Levy Release, IRS Bank Levies & IRS Seizures.