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Do I file every delinquent return for each missing year?

If you are approached by the IRS over delinquent returns, their agents are trained to request that the non-filer file all delinquent returns without regard to the number of years or tax periods involved. On the other hand, IRS Policy Statement P-5-133 provides guidelines for the extent of retroactive enforcement in delinquency cases. Policy Statement P-5-133 provides that enforcement should not extend beyond six years, but there are instances where longer or shorter periods may be enforced.

Factors agents are instructed to consider in determining whether shorter or longer periods should be enforced are:

  • Prior history of noncompliance
  • Existence of income from illegal sources
  • Publicity effect on the voluntary compliance of other taxpayers
  • Anticipated revenue in relation to the time and effort required to determine the tax due
  • Special circumstances existing in the case of a particular taxpayer and available information

Ordinarily, an IRS group manager’s approval is required for all enforcement activity that is less than or exceeds the six-year period. However, a group manager’s approval is not needed if the non-filer voluntarily files returns beyond the established enforcement period of six years.

Prior years beyond the six-year enforcement limit may still be required because of some pending IRS action. Those outstanding actions include balance due years or special monitoring activity. Lastly, when filing an Offer in Compromise after filing the delinquent returns, all of the delinquent tax returns are required to be filed in order to be eligible for an Offer in Compromise.