We all know the annual ritual: once January rolls around, you gather your tax documents to file your tax returns by the deadline to avoid back taxes and unfiled returns.
Sometimes (or maybe the whole time!) you need an extension. And maybe you don’t meet the extended deadline, and now your return is late and unfiled.
The next tax season rolls around, and you still haven’t filed last year’s return-so you don’t want to do the current one either, out of fear of the IRS or because you need last year’s data.
Now your problem is snowballing-and if you let fear get you, it can stay for years . . before the IRS decides to do you in. Don’t let this problem get ahead of you. Let us give you a road map for achieving peace of mind by getting square with the IRS.
If you do have late unfiled tax returns, you have an serious problem that you should start to fix now. The possible consequences include:
- The IRS preparing and filing a return for you and almost always overstating the tax you owe by a lot!
- Criminal prosecution
The truth is that the IRS rarely criminally prosecutes people for not filing tax returns, but this can and does happen, especially in egregious cases and those of celebrities and public figures.
The best way to avoid criminal prosecution is to voluntarily file any delinquent returns. The IRS has a time-honored policy that, in general, it will not criminally prosecute for failure-to-file those taxpayers who come forward and file their past-due tax returns.
How Far Back Do I Go?
If you have a long-standing problem, the IRS usually shows some mercy. In general, the IRS requires you to file the most recent six years of tax returns to be in current compliance with your tax return filings.
Once you file a tax return, the general three-year statute of limitations on assessment of tax starts to run. If you never file a tax return, you give the IRS no time limits to assess tax for that unfiled tax year .
In certain circumstances , you may find it advantageous to file a return beyond the IRS’s six-year requirement even if you aren’t required to.
If you have unfiled tax returns or back taxes, Williams and Kunkel, CPA, LLP CPAs can help you. Call us in Flower Mound today at 972-446-1040.
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Source: Bradford Tax Institute