Why Do Some People Not File Tax Returns?
There are many reasons why taxpayers fail to file their tax returns and consequently have back tax returns. Sometimes it is just a case of procrastination. Other taxpayers fail to comprehend the requirements in filing. Some people forget, while others think that because they owe nothing, they don’t need to file. Still others are too busy or intimidated or don’t have the money to pay someone, and there are a few who just don’t want to pay. On the other hand, there are some who knowingly evade their tax liabilities since they cannot afford the taxes.
From the perspective of the IRS and most state tax departments, your reason for not filing really doesn’t matter. The IRS files you under a simple label: non-filer. In their world, that means you probably are not a good person.
- Make no mistake here — if you have unfiled back tax returns, whether or not you owe money, the IRS and the state you live in will find you, and they will penalize you.
- Those penalties and interest fees can really add up. And the longer you wait or the more years that you fail to file, the bigger those numbers get, and the larger back taxes legal problems become.
Serious enforcement measures are in place to catch non-filers if they continue to ignore their tax declarations and persist in breaking the law. Not paying taxes can also lead to criminal prosecution. That’s why everyone should pay attention to their taxes and make sure that they file their returns. Settling back taxes is your first step in avoiding back taxes legal problems and pairing up with an attorney who knows how to handle the IRS will be of great benefit.
A back taxes lawyer who has experience working with the IRS will be able to help with back taxes legal problems and may be able to reduce your amount owed. For help, you can reach the Timothy S. Hart Law Group in New York City at (917) 382-5142 and in Albany at (518) 213-3445.
Our Back Taxes Lawyer Explains the Process of Settling Back Taxes
So, you’ve decided it’s time to settle your back taxes and file past due tax returns, as you don’t want to be one of those metaphorical bugs on the windshield. The first thing you need to do is figure out the last time you filed a return. That way you will know how many years you have of unfiled back tax returns, and depending on the level of your delinquency, you may have received a substitute for return.
Next, you need to go on an expedition to collect all the documents you’ll need to file the missing returns. You’ll need to dig through your own records, collect receipts, bank statements, mortgage interest statements, and so on.
You can visit the IRS and request your previous W-2s, 1099s, and any other tax files that were sent in the years you didn’t file. Believe it or not, they’ll be happy to help you in this way, as it’s in their interest, as well as yours, to get your back tax returns squared away.
Hire an attorney for back taxes who understands the tax laws and can help you file years’ worth of back tax returns and even reduce the amount owed.
Once you have the data you need, it’s time to sit down and fill out your back tax returns. When the papers are ready and the IRS determines how much they think you owe, a back taxes lawyer can also help on that end. He or she can negotiate on your behalf to either reduce the amount owed, if possible, or help to set up a reasonable payment schedule with the IRS and/or the New York state tax department or to whichever state you owe taxes.
Again, once you show the IRS that you seriously want to get your tax house in order, they are usually quite willing to work with you to settle and clear up your back tax returns. After all, what they really want is for everyone to pay their taxes on time and in full. Tax debt settlement options like an offer in compromise may be possible for eligible taxpayers, helping to legally settle tax debt for less than you owe.
Steps to Settle Back Taxes
Below are the abbreviated but essential steps to settling back taxes. No matter how long it has been since you’ve filed a tax return, the best way to prevent and mitigate back taxes legal problems is to begin straightening out and filing old returns.
- First, you should determine the last time you filed a tax return. Once you have a grasp on the length of time that you haven’t filed, you can determine which documents to collect.
- Visit a nearby IRS office to request your previous W-2s, 1099s, and any other tax forms sent to you in the years that you failed to file.
- You should proceed to prepare your taxes as usual. You can even hire a tax law firm to make life easier for you and to help you avoid mistakes. An attorney for back taxes knows what information needs to be gathered and how to obtain it.
- It’s critical to arrange a payment plan for your debts to the IRS. If you cannot afford to pay all at once, the IRS is kind enough to allow for an installment payment plan.
Remember, even if you owe years’ worth of back taxes, the sooner you begin to process and file past due taxes, the better. Whether you owe $10,000 or more than $100,000, the IRS has numerous payment plans and relief options that can help you resolve your bill. The IRS will be glad to see that you are taking accountability.
Negative Implications of Back Income Tax Returns
If you fail to immediately address your back tax returns (unfiled tax returns), your financial and legal situation can become very complicated. Penalties, fees, and interest will keep increasing the total amount of your taxes that are due. At worst, these additional fees can become larger than the actual amount owed.
If you haven’t been filing your returns, the IRS will file a substitute tax return for you. They are not doing you any favors in this case, since they will not include your deductions if you own a business or give you credit for dependents. A substitute tax return can increase your tax liability even further.
If you’re facing legal penalties, contact back taxes lawyer Timothy S. Hart to learn about how he can help you get everything squared away with the IRS.
After the IRS makes an assessment on your taxes without your participation, they will then proceed to collect your liabilities. Yes, the IRS can do this even without your consent or knowledge. They can place a levy on your salary and your bank accounts. When this happens, you cannot access your financial resources, since they will be frozen. The IRS will then get money directly from your wages and bank accounts to pay your outstanding debts.
IRS collection can be very frustrating, because you might lose the necessary financial resources to keep up with your daily expenses. As an attorney for back taxes, contact Timothy S. Hart for help clearing the air with the IRS and figuring out a sensible payment plan that satisfies them. Call our New York City office at (917) 382-5142 and our Albany office at (518) 213-3445.
Act Quickly to Avoid Back Taxes Legal Problems
Fortunately, even if you have unpaid taxes, your financial situation does not have to end badly. You should act immediately to address any tax deficiency or outstanding balance. When you take the time to work on your tax liabilities, you can take advantage of exemptions, deductions, and credits, which will reduce your taxes owed.
- If you can’t pay the exact amount in one single payment, the IRS will let you negotiate a reasonable monthly payment that will not impact hamper your daily expenses. All the IRS wants in return is to see your commitment to settling your tax debts related to back tax returns.
- The bottom line on unfiled back taxes is that it’s not necessarily all doom and gloom. In some cases, you may owe much less than you think; and in some other cases, they may owe you money, believe it or not. The key is to act quickly and begin tackling old tax returns.
We recently had a case where an individual failed to file for a three-year period. During years one and three, the taxpayer was owed a refund; during year two, they owed money. The refunds helped lower the penalties and interest.
So, ultimately, the taxpayer was less affected than initially anticipated, even though they had to file three years of back tax returns. Your best bet is to always pay your taxes on time and in full. With some strategic help from an attorney for back taxes, chances are usually good that things can be managed, and you can move ahead.
Back Taxes FAQ
You may want to find out the short answers and essential information as to what happens if you owe back taxes. This FAQ provides an overview of several basic questions concerning back taxes.
Your own actions can determine what happens if you have back taxes. In other words, if you take action to get back taxes paid, you can reduce or avoid penalties and negative consequences. If you ignore the IRS’s notices and do not take action, back taxes legal problems and significant fines can begin piling up.
Taxes that were unpaid in the year that they were due are considered back taxes. Taxpayers can owe federal, state, or local back taxes. Just because back taxes are unpaid or old does not mean that they will go away on their own.
If you owe back taxes, whether it’s a couple of years’ worth or more than a decade’s worth, you can still file these taxes and begin making payments. There is no real limit on how many years of back taxes you can file. The longer the taxes go unpaid and unfiled, the greater the penalties and interest can become. So, it’s in everyone’s best interests that you manage and pay back taxes.
You may be wondering, will back taxes be forgiven under certain conditions? The IRS does not just automatically forgive back taxes. However, it does have tax debt relief programs such as partial payment agreements and offers in compromise that can make tax debt settlement more manageable. The IRS does understand that certain taxpayers are struggling, and it has advice for a variety of “what if” scenarios affecting taxpayers.
The best way to find out if you have back taxes is to check with the IRS directly. To find out, check your online account with the IRS, call them by phone, or visit a local IRS office to ask.
Knowing what happens if you don’t pay your back taxes is critical. If you do not pay your taxes on time, you may face significant penalties and interest accruals over time. The IRS typically sends a letter indicating a Failure to File penalty. If back taxes continue to go unpaid, the penalties and accrued interest can actually grow larger than the tax amount owed. You don’t want that.
Back taxes are a problem that only snowballs and gets worse as time goes on. By contacting the IRS and working with a back taxes lawyer, you can take action to get taxes settled to prevent problems from growing worse.
It’s Not Just You: Back Taxes Are a Big Problem Nationally
Around 10 million taxpayers have not filed their federal returns, the IRS estimates. That number is what gets their knickers in a twist. If, on average, each one of those people owed just $100, then you’re talking about $1 billion of uncollected taxes, which is a decent amount of money in anyone’s estimation.
This is why tax people get so aggressive. Their job is simple: collect taxes. They have bosses to satisfy and numbers to meet, and they have the full weight of the government behind them and the ability to conduct tax audits and take other measures. So, while the situation may seem like using a bazooka to kill a mosquito, it really doesn’t matter to the IRS.
We had a case where an individual’s original yearly amount owed was about $3,000. But after a couple of years, the amount owed jumped to $30,000 including interest and penalties. Wait long enough and the IRS will garnish wages, place liens on your bank accounts and property, and even charge you with a crime for back tax returns.
When you contact us, we’ll start with a free consultation so you can learn more about our services and how they can help you.
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. [ 
