It’s a Good Idea to File Those Past Due tax Returns
Failing to timely file tax returns can cause some serious problems. A year or two of unfiled returns will likely get you some letters and strong warnings that, typically, are issued and tracked only by a diligent computer. Unless you are a big earner, with significant income and similarly significant taxes, while you are at the computer “stage” you sometimes have space to get caught up without too much fallout. That said, failing to file returns for 3, 5 7 or more years and you are asking for personal followup that can cause some serious heartache.
If you fail to file your tax returns, the State and IRS can create them and “file them” on your behalf. Often when the IRS files returns for you their estimated income will often exceed what you actually made and results in a tax bill that may far exceed the taxes you would otherwise owe. If you don’t respond to the notices sent by the IRS or state tax agencies asking for you to submit your delinquent tax returns, the IRS or the state have the authority to prepare substitutes tax returns on your behalf. You should avoid this at all costs. In addition to a tax bill that might be significantly more than you might owe, there will likely be penalties and interest.
In more serious cases, you the delinquent taxpayer, may actually face criminal prosecution for willful failure to file a tax return. In such cases, you may be faced not only significant with taxes and penalties, but imprisonment.
If you have unfiled returns, or received a notice from the IRS or a state tax agency demanding your unfiled tax returns, you may need assistance from an experienced tax attorney who will assist you in the compilation of your back returns while protecting your rights and representing your best interests. A CPA or accountant is no longer your best options if the government is turning up the heat on you.