Don’t ignore your tax issues. Unfiled taxes aren’t going away and IRS penalties add up quickly if not immediately addressed. Reach out to our tax attorneys for help.
What Happens if you have Unfiled Taxes?
While a majority of issues stemming from unfiled returns result in civil penalties, in some cases, taxpayers can be issued criminal tax penalties that carry hefty fines and prison time.
If your return was not filed by the due date:
- You may receive Failure To File (FTF) penalties, unless you can prove reasonable cause.
- You may receive Failure To Pay (FTP) penalties, unless you can prove reasonable cause.
- Risk losing a refund from the current tax return or from previous years’ tax returnsThe IRS may send a non-filer notice with Form 15103.
- The IRS can issue a Substitute For Return after sending out a CP3219N notice.
- Once the IRS assesses taxes, they may send notices threatening to seize your assets such as a CP504 or a CP504B for business taxes.
- Lenders won’t be able to use your tax return to verify your income, making it difficult to take out mortgages or other loans.
- The IRS will start to take collection actions quickly after you miss a deadline for paying or filing your taxes.
You must file a tax return if you have more than $400 in self-employment income. The IRS requires self-employed freelancers and sole proprietors to report their business income and expenses. Generally, you must file Schedule C with your individual income tax return, but if you have rental income or farming income, you file Schedules E and F, respectively.
If you’ve never filed, you can get caught up, but you’ll have to do reconstructive bookkeeping and file more forms than the average taxpayer.
Late Penalties and Interest
When you file your taxes late, you will be charged interest on any unpaid balance. In addition, you might be at risk of Failure To File and/or Failure To Pay penalties, which are 5% of the unpaid balance for each month you are late to file or pay your balance in full. This can add up to 25% for each penalty.
How many years does the IRS go back for unfiled tax returns?
Technically, the IRS can go back to any unfiled tax return year and apply penalties. However, they usually only evaluate the last six years for penalty enforcement.
Our tax attorneys will help you resolve your unfiled taxes and the overwhelming tax debt that comes with them.
Generally, the IRS only has 10 years to collect unpaid taxes, but the clock doesn’t start until you file a return or the agency assesses a tax against you through an audit or an SFR.
Substitute For Return
In most instances, a Substitute For Return (SFR) is the worst case scenario. When a taxpayer does not file their return on time, the IRS can prepare a return for the taxpayer based on the information they have on hand.
This consequence can deprive the taxpayer of exclusions and exemptions they may be entitled to, which could increase the total amount owed and lead to more penalties.
How to Get Rid of IRS Penalties
When you have IRS penalties, it seems like they just keep growing and growing. This leaves many taxpayers feeling overwhelmed and sometimes even hopeless.
Our tax attorneys can help you get out from under your tax situation by guiding you through the options that are available to you.
Reasonable Cause
One of the options for penalty abatement is to demonstrate reasonable cause. The IRS will consider any reason that proves you tried to comply with federal tax obligations, but were unable to do so.
Reasonable cause includes, but is not limited to:
- Fire, casualty, natural disaster or other disturbances
- Inability to obtain records
- Mistake made
- Death, serious illness or unavoidable absence
- Extreme hardship
- Mistaken advice
The IRS has been known to accept reasonable cause for many other reasons. Don’t be afraid to share your situation or story for a reasonable cause.
Penalty Abatement
Penalty abatement is the process of removing penalties after the IRS has evaluated the taxpayer’s situation. The professional tax attorneys at Wiggam Law have the knowledge and expertise to help you receive penalty abatement in order to save thousands of dollars.
Unfiled Tax Returns Help
If you have unfiled tax returns, there is help available to get you caught up and moving forward towards financial freedom. We can help you catch up on individual income tax returns, business tax returns, sales tax returns, and informational filings such as 1094 and 1095 forms. These are just a few of the people that Wiggam Law tax attorneys have helped save money.
$290,973 Saved
Suffering from severe depression and alcoholism, our client did not file federal or Georgia income tax returns for 14 years. We submitted a Voluntary Disclosure Request, which permitted our client to file tax returns for the last three years and waived all late filing penalties. This saved our client $80,498 in Georgia. And, our Penalty Abatement Request with the IRS resulted in a savings of $210,475 in penalties.
$542,852 Saved
The taxpayer did not file income tax returns, or C corp. tax returns for her business, from 2006 to 2012. The IRS audited her and the business and assessed total taxes of $609,175 and a fraud penalty of $56,783. We contested these audit assessments in Tax Court and successfully removed the fraud penalty in its entirety and reduced the tax balance to $123,106 for a total savings of $542,852. We then filed an offer in compromise on behalf of the taxpayer and settled the remaining $123,106 tax liability for $33,410.
Get Unfiled Taxes Help from Our Tax Attorneys in Atlanta, GA
We know you feel as if there is no way out from under your unfiled taxes and the penalties that you owe. However, there are ways to resolve tax liability, and the tax attorneys at Wiggam Law are here to help you.