Once you have unfiled returns, it is easy to become nervous about the consequences and neglect to submit a return in future years as well. Of course, this only compounds the problem because the IRS adds penalties and interest to the amount it thinks you owe, in addition to starting collection activities against you. It also files a Substitute for Return (SFR) for all missing tax years. The problem with the government filing an SFR is that it does so with its own best interests in mind, not yours. That means you are unlikely to get all of the credits and exemptions you are entitled to receive.
Having the federal government file an SFR for you can affect your state income taxes, even if you got those in on time. That is because the amount of tax assessed at the state level depends on your federal Adjusted Gross Income (AGI). If your AGI is artificially high because the IRS filed an SFR for you, your state will assign you a higher tax liability and bill you accordingly.
Working to settle with the IRS alone is stressful. However, you can alleviate much of that stress by hiring our agency to work on your behalf. At TaxRezPro, we understand how the system works from the inside, and our Enrolled Agents are eager to help you secure an agreement that will also satisfy the government while keeping your life as normal as possible. Contact Us Today.
Preparing Tax Returns for Previous Years
The best way to avoid all of these problems with the IRS is to file all missing returns from previous years as soon as possible. This is true even if you currently don’t have the money available to pay the balance due on any of your old tax returns. Unfortunately, the process can be quite complicated. Before you file anything, you need to track down old W2 and 1099 statements, mortgage interest statements, childcare expenses, and all other documents that you normally need to file a tax return. If you can’t locate your wage information, you will need to request a wage and income transcript from the IRS.
Things become even more problematic for those who are self-employed. You will have to recreate old records to the best of your ability or hire a forensic accountant to do it for you. This can be a costly and time-consuming process. It is only after you have done all of this that you are ready to attempt to recreate your tax returns from previous years.
The good news is that this will satisfy the IRS requirement to file. The bad news is that the IRS may not accept your new amounts owed as legitimate. If you attempt to reach an agreement for payment of unfiled tax returns, it’s likely to favor the IRS and not you. That means you could be on the hook for catch-up payments that are beyond your ability to pay. However, hiring TaxRezPro and having our tax resolution services at your disposal means you can reach an agreement with the IRS that doesn’t break your bank.
Acceptable Compromise
At TaxRezPro, we focus on helping taxpayers get current with their unfiled tax returns.
While it is easy for you to feel intimidated by the IRS as a taxpayer, we know from experience which actions are legal and which are merely scare tactics. Our goal is to protect your cash flow so you have enough income to meet your other responsibilities and maintain a decent standard of living. We also understand the perspective of the IRS and work hard to find a solution that it finds acceptable.
There is a solution to every IRS problem! Let us help you stop worrying and start living!
Contact Us Today
If you need an expert tax resolution provider who knows how to navigate the IRS maze, call us today at 1.888.4TAXREZ or use our contact form, and we’ll schedule a no-obligation confidential consultation to explain your options to permanently resolve your tax problem.