What Happens If You Have Unfiled Tax Returns?

Maybe you didn't realize you needed to file a return. Maybe you did and just forgot, and now you're out of time. You've just received a letter from the IRS informing you that you've failed to pay your taxes for the last year, and now they're coming after you. However you ended up in this situation, there's no point trying to hide from it. However, all is not lost! Read on to find out how you can resolve your unfiled tax returns and quickly get your taxes back on track.

What Happens If You Have Unfiled Tax Returns?

TaxAlliance.com

Consequences of Filing Late

If you end up with unfiled taxes, there are a number of measures that the IRS may apply to you. These can range from a simple penalty charge to court cases that may result in a criminal record.


Monetary Penalties

After midnight on April 15, the yearly deadline by which you are required to file your taxes, late penalties will come into effect. For every month you continue to not pay your taxes from here on, you'll owe an additional 5% in penalties, up to a maximum of 25%.


If you have an unpaid tax debt, but still file your taxes by April 15, then you'll have a lesser penalty applied, usually between 0.5% and 1% of the debt for every month it goes unpaid. It is possible in some cases to apply for an extension to the April 15 deadline, but you'll need to go through the proper channels and fill in the correct paperwork well in advance.


You May Lose Your Tax Refund

The IRS allows a maximum of three years to claim refunds of back taxes, but after the deadline expires at the end of the third year, you will have forfeited the refund permanently, which means you're likely to lose out on cash that you most likely need.


Even if you do try to claim it, the refund will most likely be delayed if you have consistently filed deadlines late, as the IRS will thoroughly investigate your claim, and penalties will be levied before the refund is issued, possibly causing you to lose the entire refund, depending on what is owed.


You Could Face Jail Time

The IRS will continue to send you letters for as long as you continue not paying your taxes, and the longer you ignore them, the steeper the fines can get. You could end up owing as much as $25,000 if you consistently fail to pay.


If you still don't face up to the problem, by this point you could be facing jail time as the IRS may start to build a criminal case against you. That being said, in most cases the IRS won't bother trying to indict you unless you've willfully committed a serious offense, such as running an undeclared side business, but you're still running the risk of acquiring a criminal record as a convicted felon.


What Can I Do to Avoid These Penalties?

The first step is to face the problem head-on and contact the IRS. You'll need to ask them what they're doing with your account, and whether they've begun an investigation. It's also a good idea to ask them who's dealing with your account. If it's been referred to the local revenue officer, then you can expect a visit in person and some very uncomfortable conversations. If it's been sent to a service center, then you're only likely to receive notices, for the time being.


The IRS will sometimes file a substitute return for you, called an SRF, based on information that they already hold on you. This can include W-2 and 1099 forms. If you find they've done this, they will usually allow you an additional 21 days to file your returns. Either way, you'll get a letter stating the sources of income they used to calculate your substitute returns, and you'll then be given 30 days from the date on the letter to send three important documents to the IRS.


You will need to:

  • Send in a completed tax return
  • Enclose a letter consenting to the assessment and collection form you will have received
  • Write a letter explaining why you've failed to file your taxes


Filing for Previous Years

When you're in the process of rectifying your unfiled tax returns, it's a common mistake to file further back than you need to. However, many people don't realize that to return to good standing with them, the IRS only normally requires that you file up to six years of taxes. However, this is only a general rule. Managers at the IRS may require that you file returns going back further, depending on several factors, including having a history of non-compliance and the degree to which you've broken the regulations.


You're more likely to be asked to be required to file going back further than 6 years if a local Revenue Officer has been assigned to your case, but you can always query why you've been asked to. It's worth quoting the relevant document dealing with late returns; it's called Policy Statement 5-133, Delinquent Returns—Enforcement of Filing Requirements.


Monitoring The Processing of Your Returns

You must remain in close contact with the IRS during the process of rectifying your tax situation. In particular, be sure to get hold of your account transcript, which will prove that the IRS received your returns and that you have complied with the government in all the ways you are required to.


Going forward, make sure you send your future returns to the correct department of the IRS, especially if you were issued with the aforementioned SFR notice. If this is the case, then you'll be required to send your returns to the IRS SFR unit, as they will be flagged as the subject of prior enforcement. Your returns will be under extra scrutiny from now on, so it pays to be certain everything on your form matches the IRS records, and that nothing has been left out.

IRS Reasonable Cause Amnesty

In some situations, you may be lucky enough to qualify for what is referred to as IRS Amnesty, or Reasonable Cause. Whether you'll be able to avail of this is highly dependent on the situation, but your chances will be improved if you co-operate with the investigation from the start. Reasonable Cause usually refers to serious circumstances beyond your control that have prevented you from filing your taxes on time.


To qualify, you need to show that you have taken “reasonable care and prudence” to file your taxes but were unable to due to circumstances such as fire, death, serious illness, or an inability to obtain the relevant records. While it's rare if you qualify you can expect to have the penalties discussed above reduced, or in some cases even removed altogether.


The IRS will always investigate unfiled taxes, no matter the cause, so be sure you've filed on time! However, if something has gone wrong, and the IRS has sent you a letter, then don't worry. Simply visit us here at Tax Alliance today and let us resolve your situation quickly and professionally.

More Blogs

Unlocking Hidden Deductions: What You Need to Know for a Tax-Savvy 2024

While the process of filing taxes can seem daunting, there's good news: there are numerous deductions available that can help you lower your tax bill and keep more money in your pocket.
Read More...

Top 10 Common Tax Filing Mistakes and How to Avoid Them

Whether you're filing your taxes independently or seeking assistance from a professional tax preparer, being aware of these mistakes and taking proactive measures to prevent them can help you navigate through tax season with confidence and peace of mind.
Read More...

Preparing for a Stress-Free Tax Season: A Step-by-Step Guide

With proactive preparation and a structured approach, tax season doesn't have to be a source of anxiety.
Read More...

Navigating Tax Changes: Your Comprehensive Guide to the 2024 Tax Season

From January 1st to April 15th, individuals and businesses will gather their financial documents, crunch numbers, and submit their tax returns to the Internal Revenue Service (IRS) or relevant tax authorities.
Read More...

DIY vs. Professional Tax Preparation: Making the Right Choice for You

The decision to pursue DIY or professional tax preparation should be based on your personal circumstances, priorities, and preferences.
Read More...

Former Los Angeles Politician José Huizar Sentenced to 13 Years in Federal Prison for Corruption and Tax Evasion

L.A. News: Former Los Angeles City Councilmember José Luis Huizar has been sentenced to 156 months in federal prison for orchestrating a corruption scheme during his tenure in City Hall and for tax evasion.
Read More...

How much is California property tax?

Beyond funding local services, property taxes are a key element of California's tax structure. Understanding the intricacies of property tax assessments empowers homeowners to actively participate in supporting their communities while managing their own financial responsibilities.
Read More...

What is the property tax rate in Santa Ana, CA?

Nestled in the heart of Orange County, Santa Ana, CA, is known for its vibrant community, diverse culture, and unique charm. If you're a resident or considering making Santa Ana your home, it's essential to grasp the intricacies of property tax rates specific to this locale.
Read More...

Which city in California has the highest property taxes?

Property taxes play a pivotal role in California's financial landscape, serving as a primary source of revenue for local governments.
Read More...

Can I claim tax relief in Santa Ana?

ax relief is a set of provisions or measures implemented by government authorities to alleviate the tax burden on certain individuals or groups.
Read More...

How much tax relief can I claim in Santa Ana?

Claiming tax relief is not merely about seeking monetary advantages; it's a strategic approach to bolstering personal and familial finances.
Read More...

Nervous About Tax Season? Work With Experienced Tax Consultants!

When you trust a Tax Alliance professional to handle your taxes, they'll conduct any necessary communication with the IRS. In addition, they have advanced automation technology that enables them to contact the IRS as quickly as if they shared an office. You know how critical this feature is if you've ever found yourself on hold while calling the IRS. When dealing with your finances, you want to promptly handle any questions or issues without waiting for the next available representative.
Read More...

Do You Need Tax Relief?

Due to job loss, the increasing cost of living, and issues related to the Coronavirus pandemic, millions of Americans currently have trouble paying their taxes. While the IRS is strict and believes that almost everyone should pay the full amount, there are various forms of tax relief available to citizens. By working with a good tax consultant, you can find out whether you qualify for the forgiveness program and if so, which option is the most suitable.
Read More...

7 Things to Know About Payroll Taxes

As soon as you notice that you can't pay, you should take action. The IRS has designed a comprehensive forgiveness program, which can lighten your tax burden or allow you to spread out your payments over several years. Let's have a closer look at what payroll tax is and what you can do if you can't pay your debt.
Read More...

7 Signs You Need Help Dealing With Your Back Taxes

In the past year, millions of Americans haven't filed or paid their taxes on time. While some have simply forgotten the deadline, others are struggling to pay due to a lack of funds or a bad business year. Fortunately, there are specialists who can provide tax help to anyone who is facing an IRS audit, is at risk of a lien, believes their taxes are unfair, or who doesn't have the money to pay their back taxes.
Read More...

8 Tax Relief Options That Actually Work

Being saddled with major tax burdens is no fun, and as we've all learned, there is absolutely no way to avoid taxes. There are, however, ways to reduce tax liability so the final bill isn't so overwhelming. Some of these apply to general tax filing and how taxpayer liability is calculated, while others apply to situations in which back taxes are owed. Here we look at a number of effective tax relief options that apply to both scenarios.
Read More...

When Should You Consider Using Tax Resolution Services?

The best time to hire a tax professional to handle your back taxes is at the first sign of trouble. By law, the IRS must provide you with written notice that you are in default, and they must give you time to appeal or contest the amount owed. Hiring a professional at this point will allow them to look over your taxes and assess whether or not the tax bill is accurate.
Read More...

8 Reasons to Work With a Consultant for Tax Resolution

If you haven't filed tax returns for many years, you may be worried about legal repercussions. A tax consultant will alleviate your worry by investigating your situation and helping you determine what steps you should take. This could involve seeking past employment information to enable filing tax returns for the years in question, but this isn't necessarily always the case.
Read More...

Are Your Wages Being Garnished? Start the Tax Resolution Process Today

Are Your Wages Being Garnished? Start the Tax Resolution Process Today
Read More...

How Do IRS Tax Liens Work?

A tax lien is a legal claim the government has to your property. They will place it on your home, bank account, or other assets when you have failed to pay off the tax you owe for an extended period of time. You will receive such a lien after the IRS has determined what you owe them and sent you a bill for it. If you don't come up with the amount in a timely manner or you refuse to pay, the government is legally allowed to garnish your wages or your property.
Read More...

How Can You Avoid or Stop an IRS Bank Levy?

Tax debt is a very common problem in America at the moment, and it's trickier than many other kinds of financial issues. You can't simply have it written off during a bankruptcy because many types of tax debt are considered essential, just like alimony and child support. One of the ways the IRS can collect the outstanding amount is an IRS bank levy. Fortunately, tax resolution services can help you to stop such a process and regain control.
Read More...

How Do You Qualify for an "Offer in Compromise"?

In general, the IRS expects taxpayers to come up with the full amount they owe, and they believe that most people are able to pay this. Nevertheless, they recognize that there are certain special circumstances that should be taken into consideration. If you genuinely can't pay your debt without having to struggle financially, the IRS may offer a compromise and allow you to pay less than the original amount.
Read More...

How Does IRS Tax Resolution Work?

With something like wage garnishments hanging in the balance, owing the IRS money can be a huge deal and a difficult financial burden to bear. However, IRS tax resolution is actually easier than many people believe. When you work with seasoned tax experts, you can resolve your tax debt easily.
Read More...

How Far Back Can the IRS Audit You?

Dealing with the IRS because you made a mistake on your tax return or you haven't paid your taxes is a stressful process, and it's almost always best to hire tax resolution professionals to help you out. If you are worried about how you filed your taxes this year, you might be wondering about the auditing process. How far back can the IRS audit you? Fortunately, there is a time limit, and in most cases, an audit happens in the same year you filed your return.
Read More...

How Does a Tax Audit Work?

It can be very stressful when the IRS lets you know that you are being audited. Although this doesn't always mean that there is an issue, there's a good chance that you owe the IRS and will have to pay penalties and back taxes. The best way to stay on top of the situation is to get in touch with a great tax resolution company that can help you to resolve the situation. Let's have a look at what happens when you get audited.
Read More...

How Long Does an IRS Audit Take?

Every year, a proportion of the population is chosen for IRS tax auditing. If you've received a notification that you have to undergo such an audit, you might be worried about the process and how it will affect your life in the next months. But how long does an IRS audit take, and what can you expect from the process? In today's article, we will go over the different factors that affect your audit and its duration.
Read More...

What Is the Penalty for Late Taxes?

Late taxes are always bad news, whether it's late to file or late to pay. If you don't file by the tax filing deadline, you might be looking at a penalty. This penalty is usually higher than the penalty you can get from not paying your taxes on time, so even if you aren't able to pay your owed taxes by the due date, you should absolutely still file on time.
Read More...

Biden Administration intends to enhance IRS enforcement against high earners and corporations

A significant focus on tax compliance and follow-up enforcement actions might be on the horizon. We previously reported that the Internal Revenue Service (IRS) Cyber Crimes Unit had indicated its determination to enhance enforcement activity connecting to income from cryptocurrencies. Those efforts are proceeding. However, if the Biden Administration has its way, cryptocurrency enforcement will simply be the tip of the iceberg when it pertains to enhanced tax enforcement.
Read More...

Biden Proposes Doubling IRS Workforce As Part of Plan to Snag Tax Cheats

President Joe Biden is proposing to double the size of the IRS, by hiring virtually 87,000 new workers over the following 10 years, as part of a sweeping strategy to chase down tax cheats. The hiring spree, part of a bid to enhance IRS funding by $80 billion, would be phased in to offer the department time to adjust, the Treasury Department said in a report Thursday.
Read More...

Payroll Taxes: What They Are, How They Work, and Why Your Business Needs Them

Everyone needs to pay taxes, including businesses and larger corporations. For most businesses, payroll taxes are the primary means of paying taxes to the government for the money earned through the business. But when a business is struggling financially, one of the first things to lose track of can often be taxes for the payroll. Fortunately, getting help from tax experts can help you recover and get your business back on track.
Read More...

What Happens If You Have Unfiled Tax Returns?

Maybe you didn't realize you needed to file a return. Maybe you did and just forgot, and now you're out of time. You've just received a letter from the IRS informing you that you've failed to pay your taxes for the last year, and now they're coming after you. However you ended up in this situation, there's no point trying to hide from it. However, all is not lost! Read on to find out how you can resolve your unfiled tax returns and quickly get your taxes back on track.
Read More...

What Happens During Wage Garnishment?

What happens when you owe money you can't pay? There are several ways it can go, depending on what the creditor decides, but one possibility is wage garnishment. Garnishment of wages means that a court (or governmental agency) orders the debtor's employer to send part of the debtor's paycheck directly to the creditor for the purpose of paying off your debt.
Read More...

How to Get Tax Help and Avoid IRS Tax Liens

If you've been unable to pay all your taxes in the past few years, you could be facing a tax lien, which essentially gives the IRS the right to your assets, including any real estate you own. However, there is professional tax help available to avoid IRS tax liens.
Read More...

How Can You Tell When You Owe Back Taxes?

Most Americans try to stay in the good graces of the Internal Revenue Service (IRS) by paying their taxes on time, but even the most diligent of payers can fall behind on their taxes once in a while. Knowing how to tell when you owe back taxes can help you stay on top of your IRS account and take advantage of programs available to assist in paying off tax debt.
Read More...

8 Signs You Should Seek Professional Tax Help

Let's face it: taxes can be complicated. True, some people have straightforward tax situations and can save a few dollars by filing their taxes themselves, but in many more cases, seeking help from a tax professional will be the better option. If it just so happens that you enjoy and are experienced with doing your own taxes, then we salute you, but if not, then here are eight signs that it might be wise to seek professional tax help.
Read More...

How to Choose the Right Tax Resolution Services

When you're dealing with tax debt, you probably know you could use some help dealing with the IRS. However, you might not know where to turn to get the help you need. Following these tips on how to choose the right tax resolution services will...
Read More...

Do You Qualify for Tax Resolution? The Answer May Surprise You!

Not being able to pay your tax debt can be scary, especially since you've probably heard about the heavy-handed tactics the Internal Revenue Service (IRS) can use to collect back taxes. The best thing you can do if you've fallen behind in paying your taxes...
Read More...

Efficiency through Automation!

Because of advancements in our technology, we are able to communicate with the IRS electronically, its as if we are in the same office! Faster service and more cost effective!

Our Money Back Guarantee!

If you are not happy with our tax services within the initial 21 days, we will give you a 100% refund of services rendered, no questions asked!

Price Match Guarantee

You find it, we will match it! Tax Alliance will match and beat (by 10%) any competitive offer. Contact our office today and receive a free no obligation tax consultation.

Call Us
Tax Alliance Logo

Get tax relief today!

Contact us for your free tax assessment consultation
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
🕒 Mon - Fri: 9:00AM - 5:00PM
✉️ info@taxalliance.com
📞 1.800.987.3051
🏢 2002 E. McFadden Avenue, Suite 110, Santa Ana, CA 92705
Vector image of Tax Alliance hero giving a thumbs up
Current Call Wait Time: Under 5 Seconds
Average Form Response Time: 5 Minutes

Efficiency through Automation!

Because of advancements in our technology, we are able to communicate with the IRS electronically, its as if we are in the same office! Faster service and more cost effective!

Our Money Back Guarantee!

If you are not happy with our tax services within the initial 21 days, we will give you a 100% refund of services rendered, no questions asked! We help our clients nationwide!

Price Match Guarantee

You find it, we will match it! Tax Alliance will match and beat (by 10%) any competitive offer. Contact our office today and receive a free no obligation tax consultation.

Call Us