It is nothing to be ashamed of, millions americans fail to file taxes every year. Most of my clients have not filed taxes in over ten years or more.
But what can happen if you don’t pay taxes?
The answer is a lot can happen. The IRS can legally seize your home, business, assets, future tax returns, garnish your paychecks, levy bank account, place a lien on your home, prevent you from getting a license and possibly bar you from renewing your passport.
But my taxes are older than 10 years, I’m not filing them!
Please don’t be mislead by this complex tax rule. The IRS has forever to assess your taxes if they have not been filed. The statute of limitations applies to the assessment date rather than the year the taxes were due. This is a common misconception among taxpayers. Let me say this: it is a crime not to file a required tax return and you can be prosecuted.
My clients usually benefit from filing older tax returns that have been pre-assessed by the IRS. The statute of limitations is an intricate science we do not recommend you try and tackle a problem like this alone, one mistake could cost thousands of dollars. If you don’t file back taxes you are leaving yourself open for possible tax debts. First, make sure you send the past due returns to the correct division for accurate processing. Secondly, keep in mind, if an SFR has been filed on your behalf by the IRS the returns you file must be done accurately. The reason being is, the IRS looks at these “reconsideration” returns with a very close eye.
If I file my old returns I can still get a refund right?
The likelihood of receiving old tax refunds is very low. Several factors come into play. Do you have a back tax bill the IRS can apply a previous refund to? How long has past since your return was due? Simply stated, if your returns were due over 2-3 years you will probably not be receiving the refund.
I will wait until I can afford to pay, then I will file.
As much as this theory seems logical to many taxpayers it is the opposite of the truth. The best time to take care of a tax problem is when you are not in the best position to pay. The lower your income the less money you have leftover each month to pay the IRS. Even if you can afford to pay nothing, it is still advisable to file your old returns. This will close up the statute of limitations and more importantly will bring you into compliance. Not filing and not paying are two different penalties. It is always best to file even if you can’t pay. Not filing is a criminal offense punishable by law.
If you have questions about the above mentioned tax situations we are happy to speak to you. Please don’t wait, tax problems don’t solve themselves; they only get worse.