The tax filing deadline is only days away and many are still scrambling to get their returns prepared before the Tuesday, October 15th deadline. If you are a tax stressed consumers who may be considering not filing a tax return because you can’t pay the IRS back taxes you owe, here are five points you need to know:
- Failure to file tax returns is a misdemeanor, punishable by up to $10,000 per year and one year in jail. The IRS is aggressively going after non-filers. Actor Wesley Snipes just finished a three year prison sentence for not filing three years’ worth of returns.
- The IRS is only obligated to send notices to the last known address, so if you moved since last filing, you may not be aware the IRS is trying to reach you.
- To qualify for an IRS payment plan or Offer in Compromise tax settlement to resolve your back taxes, you are required to file all delinquent tax returns with the IRS.
- What happens when you don’t file? The IRS files an “SFR” (Substitute for Return) on your behalf. However, SFR’s are prepared with the government’s interests in mind, not yours! Meaning they will overstate what taxes, penalties and interest you owe and only take one standard deductions and one personal exemption. Important note: this means you will not get credit for deductions which you may be entitled to such as exemptions for spouses, children, interest and taxes on your home, cost of any stock or real estate sales, and business expenses, etc.
- Taxpayers always have the right to file their original tax return, no matter how late it’s filed and even if you have several years of unfiled delinquent returns.
Considering the consequences for not doing so, it’s important to have a Certified Tax Resolution Specialist prepare your latest tax return, and any prior delinquent unfiled tax returns as soon as possible to get you back into tax compliance. By preparing your delinquent returns, these tax professionals can determine what you truly owe and help you avoid any future IRS tax issues.
