Filing Back Taxes
Filing Back Taxes: Page Content at a Glance
Some of us are natural procrastinators. Maybe it’s something minor like letting dishes pile up on the sink. Or maybe it’s something important like not completing your taxes on time. Unfortunately, those dishes aren’t going to magically disappear … and neither is the IRS or the state of California.
Eventually, the IRS or California will call you out on your failure to file your taxes properly. If you are thinking about not filing back taxes, you need to understand a few things.
First, filing taxes late or not at all does not absolve you of paying what you owe. You will owe the original amount plus interest and now you can add draconian penalties. After a few years of tax procrastination, the fees can result in an overwhelming bill.
Second, you could be subject to criminal tax prosecution for not filing your taxes. Hiring a Tax Attorney who knows how to get you back in the system with your scalp intact is important in cases like this.
Finally, if you are due to receive a refund and you skip filing taxes, you may have to forfeit that refund. Once a three-year period passes, (4 years CA) you no longer have a right to the refund.
Ultimately, the sooner you take care of this problem, the better. If you’re concerned about an IRS notification regarding filing back taxes, schedule a 10-minute call with an experienced tax attorney. Contact the Tax Law Offices of David W. Klasing today.
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 a Delinquent Tax Filing?
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.
Get Help for Filing Back Taxes
California Failure to File Taxes Attorney and CPA
When people think of tax crimes, they tend to think of tax fraud or tax evasion designed to illegally minimize what you owe in taxes by intentionally underreporting net taxable income by omitting taxable income, claiming deductions or credits for which you are not entitled. They may overlook another, simple but often forgotten common tax crime, failing to file your tax returns at all when you have a filing requirement. If this is done willfully, meaning you knew you had to file a tax return and chose not to, it could lead to criminal tax charges with potential penalties, including jail time. The simple act of willful non-filing is a misdemeanor punishable by a year in jail for each tax year within the five-year statute of limitations.
Note: Wesley Snipes recently did three years in jail for this.
Moreover, if the Spies evasion factors are present, misdemeanor non-filing can be ramped to felony non-filing punishable by 3-5 years in jail for each count within the five year statute of limitations. Even if your actions were not willful, you are at substantially increased risk for an audit when you file the delinquent returns as the IRS and FTB know you have intense financial pressure on you to minimize your back tax liability could still face civil penalties, including high fines and interest on back taxes owed. You really do not want to kick over a beehive with the taxing authorities by dropping out of the system and getting caught cheating on the way back in.
Our team has decades of experience in working with non-filers and we have never had a non-filer get criminally charged on their way back into the tax system. Our ordinary process is we will contact the IRS and state taxing authority’s and request a temporary hold on collections while we bring you back into tax compliance. We will request account and wage and income transcripts, so we know what information they have on you before we file. We will determine exactly how many tax returns have to be filed to bring you back into tax compliance by utilizing the IRS’s 6 year non-filer policy and possibly going back further only where it is beneficial to replace a federal substitute for return or FTB proposed assessment with an original return that shows a lower amount of tax due. If necessary, we will do an accurate accounting of your business and then file true accurate and complete returns entity and personal income tax returns. We will then assist you with the resulting collection action and make available to you the most advantageous collection alternative in your unique circumstances. We will represent you in any subsequent tax audit, appeal or litigation at your discretion. We will strive to bring you back into the system with the lowest tax, penalties and interest legally possible and make sure you keep your scalp while you do it.
At the Tax Law Offices of David W. Klasing, our skilled California failure to file taxes Attorneys and CPAs can help you prepare records and file your returns in a timely and complete matter before any problems occur. If you have already missed the filing deadline without requesting an extension and are facing potential civil or criminal tax penalties, we can work to mitigate the damage and bring you back into compliance. Call us today at (800) 681-1295 to set up a consultation or schedule ONLINE today.
What is the Crime of Failure to File Taxes in California?
Each year Californians who have income to report are required to file a federal tax return with the IRS and a state tax return with the California Franchise Tax Board. Some people may also need to file returns with other agencies, such as with the Economic Development Department, if you own a business and have to remit payroll taxes to the state. The deadline for filing your income tax returns with the IRS and FTB is usually on April 15th. However, you can request an extension if you need more time to get your affairs in order, and these will typically be granted. However, an extension of time to file is NOT an extension of time to pay.
As noted above, failure to file your tax return will most of the time only lead to civil penalties, like fines and interest. However, anyone who willfully fails to file can be charged with the crime of failure to file taxes. The longer you wait to file after the deadline, the more tax years you are delinquent, the higher the amounts of unreported net income, the higher the chance is that your returns will be met with a high level of scrutiny and that auditors or criminal tax investigators will strongly consider the possibility that your conduct in non-filing was willful. As such, the sooner you retain an experienced dual Licensed Tax Lawyer and CPA like those at the Tax Law Offices of David W. Klasing, the better chance we have of getting you back into compliance before the matter turns from a civil issue into a criminal one.
Penalties for Failure to File Taxes in California
The largest civil penalty assessed by the IRS for failing to file your taxes on time will typically be assessed at 5% of the amount of your net unpaid taxes (after estimated tax payments and withholding) for each month you are late, with an upper limit of 25% starting from April 15th of the year following the taxable calendar year at issue.
If your actions were willful and criminal charge apply, you could face penalties including up to 1 year in jail and up to $25,000 in fines, or $100,000 in the case of a corporation. Furthermore, you will suffer all the negative consequences that come with a criminal record, including difficulty finding gainful employment and a potential inability to be professionally licensed in some fields. Different penalties can also apply for California-specific charges.
What Do I Need to Know if I am Considering Amending my Returns Due to Intentional or Unintentional Errors?
Sometimes, although you may not have failed entirely to file a tax return, the tax return you filed, or its supporting documents may have been inaccurate or incomplete and need to be amended. This process is somewhat different than the process for filing a return when you never previously filed. There are a few different ways that you might want to go about this, and before making any sort of decision you should always consult with a skilled dually licensed Tax Attorney and CPA like those at the Tax Law Offices of David W. Klasing. We can help explain the upsides and downsides of different forms of disclosure, help explain the difference between willful and non-willful violations, and make sure you expose yourself to as little civil or criminal liability as possible. Below, we go through a few of the more common programs that involve coming forward to voluntarily amend returns.
Amending through a service center via form 1040x
The first way that you might be able to fix or amend errors on your returns in by submitting a Form 1040x through the same service center where you originally filed. Amending a 1040 is basically an update of the original Form 1040 that you filed as part of your yearly return. This form must generally be filed within 3 years of the date when the original returns were first filed or else this avenue of error correction is foreclosed. It also must ordinarily be filed in paper rather than electronic form, and you generally would be well advised to send appropriate supporting documentation as well, depending on the particulars of your situation. An experienced dually licensed Tax Attorney and CPA like those at the Tax Law Offices of David W. Klasing can help you figure out if this is the right option for you and, if so, can help you though the process.
One other thing to note is that in some cases, you can correct your return, as opposed to amending it. This is only permitted if the actual due date of the return has not yet passed, such as in a situation where you filed your returns early. If you file an amended return before the original due date, it may be considered a “superseding return” and it will most likely be treated as if any unintentional errors on the first submitted return never occurred. Intentional errors could still be viewed as attempted income tax evasion.
Voluntary or Streamlined Disclosure Programs
Whether you are dealing with domestic issues or offshore issues like omitted taxable sources of offshore income coupled with a failure to file FBAR reports, you may be eligible for either the IRS’s full blown domestic or offshore voluntary disclosure program or the IRS’s expat or domestic streamlined voluntary disclosure program. In either case, coming forward about your errors or fraudulent filings and disclosing through these programs will ordinarily result is smaller fines and a nearly guaranteed pass on criminal tax and information reporting prosecution, provided an audit or criminal investigation into your behavior has not already begun and you utilize the correct program. Of the two, streamlined disclosure typically ends with much smaller financial penalty for your actions but is only open to those whose original behavior was non-willful, as in a unintentional mistake like a math error. Falsely certifying that your actions were not willful to get into a streamlined disclosure program could directly result in criminal tax prosecution. Instead, willful violators should go through the full blown offshore voluntary disclosure program, even if it results in them paying more in additional tax penalties and interest.
What is ultra-important to note here is that is amended returns can of themselves be viewed as a criminal admission or at least evidence of tax fraud on the original returns. For this reason, it is best to consult with a dually licensed criminal tax defense attorney and CPA like those at the tax law offices of David W. Klasing where there is potential the IRS could misconstrue your actions concerning the errors on the original tax returns.
How Can A Skilled Dual Licensed Tax Lawyer and CPA Help Me with my History of Failing to File Taxes in California?
The best time to deal with issues related to failure to file taxes is before an audit or criminal tax investigation over such a failure ever occurs. You can do this by hiring a skilled Tax Attorney and team of supporting CPAs like those at the Tax Law Offices of David W. Klasing. Because of our background as Certified Public Accountants in addition to being Licensed Attorneys, we have the skills necessary to help create and implement book and record-keeping measures as well as to keep track of your reporting obligations and filing deadlines and help you fill out and file your federal and state returns. If more time is needed to properly and completely file the returns, we can help you request a collection deadline extension.
If you have already failed to file or to request an extension, we can work to negotiate a deal to get you back into compliance with the IRS or the relevant state agency without exposure to criminal tax penalties. In many cases, you may still be required to pay the assessed civil penalties and interest. In matters where your actions were not deliberate, and you had a reasonable excuse for failing to file your taxes on time, however, we may be able to convince the taxing authorities to waive the civil penalties as well. For example, if you had a medical emergency and were hospitalized for the month proceeding the filing date, the agency will be more likely to waive the penalties. Further, as noted earlier, the longer you wait to get into compliance, the lower the chance of this type of concession becomes.
Finally, if you have already been criminally investigated and are likely to be charged with crimes related to your failure to file taxes, our skilled criminal tax defense attorneys can represent you in your case and work to mitigate the damage and bring the matter to the most positive possible resolution. We will try to attempt to work out a deal where you pay back what you owe, and likely some civil fines as well, potentially in exchange for the criminal charges being dropped. If no satisfactory deal is offered, we can fight to show that your behavior was not willful at trial. However, it is important to note that referrals to the IRS criminal investigation unit have an overall 90% conviction rate.
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Call Our Skilled California Failure to File Taxes Attorneys Today
If you have failed to file your state or federal taxes, the longer you wait to do something about it, the greater chance there will be that you could end facing serious criminal tax charges. At the Tax Law Offices of David W. Klasing, our knowledgeable California failure to file tax attorneys have years of experience successfully helping clients facing potential failure to file or other tax crimes be brought back into compliance while minimizing civil penalties and illuminating the risk of criminal tax exposure. Call us today at (800) 681-1295 to schedule a consultation or book ONLINE today.
Filing Back Taxes FAQs
How do I File 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.
How long do you have to file back taxes?
The IRS will allow back taxes to be filed for up to three years.
Can you got to jail for not filing a tax return?
Yes. You can be sent to jail for not filing your tax returns.
What happens if you never file your taxes?
The IRS can collect tax debt for an unlimited amount of time, along with applying penalties and interest.
What happens if you can’t afford to pay your taxes?
The IRS allows for taxpayers to make payments for tax debts that are less than $25,000.
Do I have to file and pay income taxes?
Generally, the rule of thumb is that if you have income from any source derived, then you are required to file and pay taxes. However, at the federal level, your filing requirement, whether you have to file a return is based on your status, age, and income level. Thus, if you do not have income greater than the standard deduction, you will generally not have a filing requirement. For instance, if you are single, under age 65, and earn less than $12,550, then you do not have a filing requirement. The level of income increases with age, and with a change in filing status, i.e. Married Filing Jointly, Head of Household, etc.
Similarly, in the State of California, generally, if you are required to file a federal tax return, you also are required to file a State of California tax return. In addition, like the federal level, threshold depends on dependents, age, and income. Furthermore, your requirement to file and pay California income taxes also applies if you are resident, including part-year resident, and even if you are a nonresident, but have income from a source in California.
What are the penalties for not filing your taxes?
At the federal level, the failure to file penalty depends upon whether you have a balance due on your return. The penalty applies when a taxpayer fails to file income taxes when due. The calculation of the penalty is five (5%) of the balance due for each month or part of the month that the tax return is late, from the due original due date, not the date of extension. However, the penalty does not exceed twenty-five (25%) of the unpaid taxes. In addition to the penalties due on the balance, interest accrues the on the tax due beginning on the due date as well. In California, the failure to file penalty follows the federal, except that the maximum penalty may be higher if the failure to file is due to fraud. The minimum penalty in California for individuals is $135 or 100% of the tax due on the return.
What enforcement options does the IRS have if taxpayers who fail to file their taxes on time?
The IRS can assess civil and criminal penalties depending upon the nature of the taxpayer’s failure to file. Civil penalties can have significant consequences for taxpayers. For instance, the IRS may levy bank accounts or garnish wages. In addition, the IRS can seize property of the taxpayer. Furthermore, in order to help in its collection efforts, the IRS can even issue summonses to persons with information about preparation of unfiled tax returns.
As for criminal penalties, the IRS can pursue criminal tax enforcement for willful failure to file tax returns. For instance, if a taxpayer attempts to evade of defeat at tax, they can be charged with a misdemeanor. However, if the IRS can prove that the taxpayer committed an overt act, the penalty can be increased to a felony. A taxpayer convicted of a misdemeanor failure to file tax returns can be sentenced to up to 1 year and fined up to $25,000 ($100,000 for Corporations. Meanwhile a felony conviction can carry a sentence of up to 5 years, and a fine of up to $100,000 ($500,000 for Corporations). Thus, failure to file and pay taxes can have significant financial consequences as well as criminal punishment.
If you fail to file tax returns, the first thing you need to do is call the Tax Attorneys and CPAs at the Tax Law Offices of David W. Klasing, P.C., to advise you of your rights and how to navigate dealing with the IRS. In addition, you need to do is seek to get in compliance with tax responsibilities, and then to seek to resolve your delinquent tax liability. Finally, there are settlement options that may be available. Find out more information about your options when you have failed to file tax returns, by contacting the Tax Attorneys and CPAs at the Tax Law Offices of David W. Klasing, P.C.
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.