delinquent TAXes

Taxpayers who do not file a required tax return can face IRS delinquent return enforcement actions.  These actions can include requests to file and other more serious enforcement activity such as filing a return for the taxpayer and criminal investigations.  Taxpayers can face serious penalties for late filing, including a 5% per month late filing penalty (up to 25%).  In order to get back into filing compliance, the taxpayer should follow IRS procedures and utilize several best practices to resolve their late filing issue.

Advance Tax Relief can help, call (713)300-3965 for a free consultation. 

If you don’t file your tax return on time each year, the IRS doesn’t take it lightly. And neither should you.

When you don’t file your tax returns, several things happen:

• You will not receive any tax refund you are due.
• You will be charged a Failure to File penalty* if you were required to file a return.
• If you owe taxes, you will be charged a Failure to Pay penalty*.
• The balance due starts to accrue interest.
• Self-employed individuals won’t receive credit for Social Security income reported.

*You may be able to request a penalty waiver.

If you have unfiled tax returns, the best way to stay out of trouble with the IRS is to immediately file your back taxes. Think that the IRS doesn't notice your unfiled tax returns? Think again. Even if it's been years since the unfiled taxes, the IRS can notify you at any time that they know and are ready to aggressively pursue back tax payments.

If you don't file, the IRS will generate a simple, substitute return, which will not include any credits, deductions, or exemptions you are entitled to. And it leads to a tax bill that can trigger the collection process.

Also, the IRS has targeted non-filers as one of its highest priorities. The agency typically goes after the big fish first, but don’t rely on the IRS ignoring your smaller profile.

Generally, you must file the previous six years along with the current tax return to get back into the good graces of the IRS. However, there is no statute of limitations on IRS collection and enforcement actions.

Failure to File and Failure to Pay Penalties

More on those late penalties:

• Failure to file - the penalty is 5% of the unpaid tax per month, with a maximum of 25%
• Fraudulent failure to file can triple the penalty to a maximum of 75%.
• Failure to pay - the penalty is 0.5% per month with a maximum of 25%.
• Interest is accrued not just on your balance but also on the penalties.
• A failure to file a penalty on any return that doesn’t have a tax debt associated with it is effectively zero. If you want your refund, you have three years to file the relevant returns to receive it. Any refunds from tax returns more than three years old are forfeited.

Earned Income Tax Credit 

You must file your tax return to claim the earned income tax credit, even if you are otherwise not required to file. Like refunds, you must file within three years of the return due date to receive the credit.

Collection and Enforcement Actions

Before the IRS files a substitute return for you, it will send several notices in the mail requesting you to file your delinquent returns. If you don’t respond, the IRS can and will:

• File a substitute return without any exemptions, deductions, or credits you qualify for.
• Place your real property under a tax lien or tax levy if you owe taxes.
• Garnish your wages including social security and other income sources.
• Garnish your bank account.
• Seize your retirement savings or dividends from investments.
• Seize personal property such as boats, RVs, and jewelry.
• Send garnishment notices to your vendors if you are self-employed.
• Even bankruptcy can’t stop many of the collection and enforcement actions the IRS takes.

If you willfully refuse to file, you can be charged with tax evasion. Tax evasion is any action taken to evade the assessment of federal or state taxes. Tax evasion is a federal crime that can net up to five years in prison for each offense. 

At the least, you may receive one year for every year you neglected to file your income tax return. To be fair, the IRS usually only targets habitual non-filers of non-processable returns and tax protesters for criminal prosecution.

Hire Tax Professionals

If you have IRS tax problems because of unfiled tax returns, Advance Tax Relief can help you. 

Call (713)300-3965 for a free consultation.

Advance Tax Relief is a BBB Accredited Business 

"I was behind on my taxes for 7 years and could not sleep at night, I called Advance Tax Relief, they took care of me and I got refunds for tax years not filed. I recommend their service" - Paul Thompson, Texas 

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