Filing your taxes is never fun, but if you don’t file them at all, the IRS will come after you. They can file a return on your behalf in their best interests, not yours. If you have unfiled returns, you could face harsh penalties including fines, or even criminal charges.
The IRS has strong collection tools and an unyielding character, making this one of the worst mistakes someone could do. It’s not easy to get on their bad side and having years’ worth of unfiled returns simply adds fuel to the fire!
The IRS is constantly on the lookout for taxpayers who have neglected to submit their due income and/or payroll tax forms. If you have delinquent returns, it is only a matter of time until the IRS discovers them and demands the return and payment, along with penalties and interest. Soon, the IRS will contact you and the amount they claim you owe will be significantly higher than the amount you actually owe. You don’t want to be in this situation, but unless you can show them otherwise, you will have to pay them the amount they say you owe.
What Happens If You Have Unfiled Tax Returns?
The IRS mandates that you submit your tax returns by the 15th of April each year. Although submitting your tax returns may not be the most enjoyable thing in the world, it is nonetheless essential. Many people wait until the last minute to file, or they don’t file at all. Unfiled tax returns can have serious consequences. You may be subject to the following penalties if you don’t file your returns:
For every month that a tax return is late, the IRS will charge a penalty equal to 5% of any unpaid taxes. This will go no higher than 25%.
If you file by April 15 but owe the government, you’ll face a reduced penalty. You will be penalized 0.5% of the outstanding tax bill for each month it remains unpaid. Remember that you must file by the April 15 deadline each year. Consult a tax professional if you need to file an extension to avoid late filing fees. You should note, though, that an extension will not provide an extension to pay. Failure to pay penalties cannot be avoided unless paid by the tax deadline.
When you consistently file your taxes late, the government can spend time investigating you. The fact that you submit your taxes late will result in penalties being assessed. Depending on the amount of the penalties, this may result in a delay or loss of your tax refund.
Forfeiture of Refund
You have three years to get your back tax refunds from the IRS. If you fail to file your taxes, you will have lost those back-tax refunds after the third year. You are essentially losing free money that you could probably use.
Substitute for Return (SFR)
If you have unfiled tax returns, the IRS will oftentimes file a Substitute Federal Return (SFR) for you. This tax return has information from W2s, 1099s, and other forms that your employer, bank, or other entities sent to the IRS. However, it will not include any tax credits or deductions for which you may be eligible. In addition, the IRS will only use the filing status of single or married filing separately and deduct only the standard deduction. This could result in a substantially larger tax bill than if you had filed on your own.
How to Resolve Unfiled Tax Returns?
The longer you wait to file your tax return, the worse the situation will become. If you have unfiled tax returns, here are some important things that you can do:
Get Your Documentation
If you haven’t taken care of your taxes for too long, it’s time to get things done. An expert tax resolution firm can assist get things back on track. Even if you lost your records, there are often alternative ways to reconstruct your tax returns. However, only a tax resolution specialist will be able to do this.
If you are missing W2 and 1099 forms from previous years, an expert tax resolution professional can retrieve these documents for you.
Go Through the Numbers
Many people don’t file their tax returns because they’re afraid they won’t have enough money to pay, but these worries are often unfounded. According to IRS statistics, about 34% of all federal tax forms that haven’t been filed may actually be due a refund!
Now that you have all the necessary documentation, it is time to run the numbers. While you won’t be able to receive exact figures before you file the returns, you can get an idea of how much you might owe.
Hire a Professional
When it comes to back taxes and unfiled tax returns, it’s critical to have someone on your side who knows what they’re doing. A tax resolution professional can provide vital advice and direction on how to reduce the amount that the IRS claims you owe and the best steps to take for your situation.
You are not alone in your fight against the IRS. The IRS is ready and waiting for you, so having an expert on your side who knows how to get the support you need and deserve is essential.
Filing those past due returns as soon as possible will go a long way toward getting you back on track before any further damage becomes irrevocable. Filing your taxes may appear to be a difficult task, but there is help available. The right professional can resolve issues with the IRS and alleviate the stress of this challenging circumstance.
Contact Peace of Mind Tax Help Today
If you have unfiled tax returns and are seeking tax relief, we can assist you! We offer a free consultation with one of our tax resolution experts to help ease the stress of your situation. You don’t have to worry about confidentiality or cost because the consultation is completely free.