Filing Back Taxes
Taxpayers who realize that they made a filing error or who receive a letter from the IRS communicating some deficiency in their tax filing or tax payments may whip themselves into a state of panic. The taxpayer may fear the consequences their tax error will bring including additional penalties, fines, and an increase in the likelihood of facing a tax audit. However, fear, worry, and anxiety will bring you no closer to a solution for your tax situation.
Working with an experienced tax attorney can provide the guidance and peace of mind you need as you navigate the challenges of coming back into compliance with the U.S. Tax Code. Working with a tax attorney can help you better understand the risk you face and your potential pathways to mitigate the consequences and penalties you face.
What Are the Penalties for Filing Taxes Late?
Individuals who fail to file their taxes when an obligation to do so exists are subject to fines and penalties and the simple fact is that most people have an obligation to filing back taxes. For a sole filer in 2014, the obligation to file taxes triggers at just $10,150 in gross income. Clearly, at these levels most individuals will have an obligation to file taxes, though, many people making only marginally more than $50,000 will receive a refund. However, filers who do not file their taxes cannot receive a tax refund. That is, filing a refund is the only way a taxpayer can receive his or her refund back from the government. Furthermore, a taxpayer who fails to file the tax return for three years from the original due date will lose his or her right to the funds.
However, taxpayers always have the option to file an automatic extension via form 4868. However, an extension can only be filed before the taxes are do and cannot be done retroactively. Furthermore, the extension of time to file is just that. The extension only provides a taxpayer with additional time to file his or her taxes. Payment of at least 90 percent the taxes due and owing is still required for the taxpayer to avoid a failure to pay penalty.
Aside from the inability to receive one’s income tax refund, other penalties can apply to non-compliant taxpayers. The taxpayer may be subject to a failure to file penalty which is assessed at a 5 percent penalty on the unpaid tax for every month or part of a month where a tax debt is due and owing. Taxpayer’s may also become subject to a failure to pay penalty. The failure to pay penalty is less severe than the failure to file penalty and is assess at one-half of one percent for each month or part of a month where the obligation is unsatisfied.
However, if the taxpayer’s conduct or circumstances suggests something more than a mere mistake or error, criminal tax penalties may be advanced. Taxpayers who intentionally or voluntarily endeavor to evade or defeat taxes can be held criminally liable for their actions. Criminal tax penalties typically carry harsh penalties including a federal prison sentence.
What Can I do to Fix My Back Taxes?
The exact steps you take to correct your tax filing and filing back taxes cannot be determined until assessing your tax situation. For taxpayers with fairly straightforward taxes who do not owe the IRS money at the year’s end, correcting your past mistakes may be as simple as filing the missing returns. For some taxpayers, filing up to six years of returns may be required. You may even receive a tax refund. However, for taxpayers who have additional tax problems or who may have owed the IRS money at the end of the year, the process to catch-up on your missed filings may be more involved and require additional strategic planning. In any case, taxpayers should consult with a tax professional immediately because the taxpayer’s bargaining position is the strongest when he or she comes forward voluntarily.
Questions and Answers on Unfiled Back Taxes
- What are the common issues that non-filers face?
- Risk of audit after filing delinquent prior year returns
- Can substitute return deficiency be discharge in bankruptcy
- Substitute return modified by subsequent delinquent return?
- Do I file every delinquent return for each missing year?
- How does the IRS identify non-filers?
- How important is it to the government that I didn’t file?
- Delinquent tax return criminal prosecution likelihood
- Will I get a refund on a delinquent tax year?
- What happens after enforcement action has begun?
- Should I use an attorney, EA or a CPA to represent me when I re-enter the tax system?
- Why do people drop out of the tax system?
- What happens after the IRS identifies me as a non-filer?
- IRS has not previously filed substitute returns
- Tax attorney representation when re-entering tax system
- How will the government force me to file returns?
- What penalties can IRS impose on delinquent tax filings?
- What should I do to re-enter the tax system?
- Can Law Office of David W. Klasing help me re-enter system?
- Will tax collection taken by authorities affect my credit
- I concealed bank accounts from the government
- Forgetting or failing to file tax return
If you are looking to correct tax mistakes due to unfiled taxes, the tax professionals of the Tax Law Offices of David W. Klasing can help you with filing back taxes, get caught up and put your mind to ease with any IRS audits. To schedule a reduced-rate tax consultation call us at 800-681-1295 or contact us online today. We will schedule at one of our convenient tax law office locations in Los Angeles or Orange County.