Unfiled Tax Returns and the Issue of Criminal Conduct

July 26, 2013 | Late Filed Returns

Unfiled Tax Returns and the Issue of Criminal Conduct

Usually, the most panicked clients to call me have not filed their tax returns in many years, and are worried that they may be arrested. Sometimes clients are being audited for nontax issues (for instance workman’s compensation insurance) by the State of New York, and the auditor mentions the taxes and that creates concern. The good news is that typically the IRS or NYS Tax will not cause you to be arrested for simple failing to file your tax returns on time. It can happen, but it is very rare.

The IRS and NYS normally take the approach of creating their own version of the tax return you failed to file, and assessing the taxes owed that they compute based on limited information. The key is to correct the wrong, and file your own tax return since the IRS version will often overstate the tax liability owed. The next step would then be to create a tax payment plan for the taxes owed. By using this approach, criminal tax issues can be greatly avoided, and both New York State and the IRS will be pleased the issue is being resolved.

The long standing IRS’s and NYS voluntary disclosure policy applies to a taxpayer who:

  • Informs the IRS of their failure to file the tax returns for one or more years.
  • Makes the tax return disclosure prior to being notified by the IRS or NYS that they are under criminal investigation for such failure to file.
  • Files a correct income tax return, or cooperates with the IRS and NYS in ascertaining their correct income tax liability.
  • Makes full payment of the amount of the income or sales taxes due, or if unable to make payment in full, to create an income tax payment plan for the taxes balance owed. As a Tax Attorney NYC we are here to help you with you tax problem.
  • Attorney Timothy Hart

    Timothy S Hart, the founding partner of the tax law firm of Timothy S. Hart Law Group, P.C. is both a New York Tax Lawyer & Certified Public Accountant. His area of expertise includes innovative solutions to solve your Internal Revenue Service and New York State tax problems, including tax settlements through the Federal and New York State offer in compromise programs, filing unfiled tax returns, voluntary disclosures, tax audits, and criminal investigations. [ Attorney Bio ]