Delinquent Taxes and Unfiled Returns in Naples
Radha Rothrock is a tax attorney in Naples. She is also a certified IRS tax preparer and is admitted to appear before the United States Tax Court in all fifty states. Part of her practice includes the filing of unfiled returns resulting in delinquent taxes.
What to do if you have not filed a tax return in several years
There are a number of reasons why people have not filed their taxes, such as depression, divorce, bad business practices and panic because a previous year’s return had not been filed. Before the IRS will consider an installment agreement or an offer in compromise, all your tax returns must be filed. The same is true with filing bankruptcy. Your tax returns must be up to date if you file bankruptcy. If you have not filed your taxes in several years, the process can seem overwhelming. At the Rothrock Law Firm, we start by having you execute a power of attorney with us so that the IRS will be required to contact us rather than contacting you directly. We then order all your tax information returns from the IRS for the years that you did not file. We prepare the returns based on the information provided by the IRS and adjust the expenses according to the information you provide us. If you did not owe any money for the years that you did not file, you will not have any penalty or interest for those years. Believe it or not, it is also possible that you could be eligible to get a refund if the return was due in the last three years. If you end up owing money, we look at the best method of repaying the money, such as filing bankruptcy, submitting an offer in compromise, or proposing an installment agreement.
Should I file a tax return even if I am not required to file?
Yes, you should file your tax return every year even if you are not required to file. Filing a tax return triggers the statute of limitations period. If you file your return, the IRS has three years from the date you file your return to audit you and assess any taxes owed. Limitations doesn’t start to run until you file the return.
What Will the IRS do if I don’t file a return?
Unfortunately, the IRS might not do anything for several years and then, out of the blue, you get a letter from your employer that the IRS intends to levy your wages. The IRS might have attempted to contact you at your last known address, and you did not get the message. By then, your options become more limited because you probably threw away receipts or other items that could have lowered your taxes. Although we can still accept your case if this occurs, you might end up paying more money. Often times, the IRS will file a return for you if you don’t file the return. This is called a Substitute For Return, or “SFR.” The IRS bases its information on the information that your employer, credit card companies, and mortgage companies provide to them. When the IRS files a return for you, it will not give you any credit for dependents, and it will not deduct any expenses that you might be able to deduct. The end result is that you will more than likely owe more taxes than if you had filed the return yourself. In addition, penalties and interest will be calculated from the amount that the IRS claims that you owe. If you hire the Rothrock Law Firm, we will file corrected returns for the years in which the IRS filed its returns so that your amounts owed will be adjusted.
How many years should I go back when I file?
This one is a hard question, and tax professionals have different opinions on this. Usually, the IRS agent will tell you how many years that he or she wants filed. If you owe ten years of unfiled returns, and the agent wants five years, you can file the five years. The problem you run into is the statute of limitations. Technically, limitations doesn’t run if you don’t file a return. Even if the IRS tells you it is interested in five years only, it is possible they can contact you later on about the previous five years.
What is the statute of limitations and when does it run?
The statute of limitations is the deadline in which someone can legally enforce a claim against you. There are different rules for different scenarios. Please visit our statute of limitations page to see the various rules.
Can the IRS file criminal charges against me if I don’t file a return?
Yes, however, it does not happen that often. Intentionally not filing your income tax return is a federal crime. It is punishable by up to $25,000 and one year in prison, for each year not filed. As a rule of thumb, if the federal government is investigating you for something else, they might use this law against you, otherwise, they typically will not file charges against you. In the event you are concerned that the IRS might file criminal charges against you, it is important to hire an attorney, not a CPA or enrolled agent, to handle your case. You only have an attorney client privilege with an attorney. If you tell something to your CPA or enrolled agent, the government can subpoena that person to testify against you.