Navigating Unfiled Tax Returns: What You Need to Know
As someone who has spent years working in private practice, I have encountered countless cases involving unfiled tax returns. Surprisingly, I assumed that most of my practice would center around settling IRS debt due to my background with the IRS. However, unfiled tax returns have become a predominant part of my work. With millions of people neglecting to file their returns, this issue is more common than you might think.
According to recent data, there were about 25 million open IRS cases last year, encompassing both unfiled returns and IRS debt. If you find yourself among those with unfiled tax returns, it’s important to know that the IRS has made it considerably easier to get back on track.
Understanding IRS Policy on Unfiled Returns
The IRS has established a policy, specifically Policy Statement 5-133, which states that you are required to file the last six years of tax returns. This policy assumes an understanding that circumstances change, and older records might not be available. In fact, they are quite forgiving about periods beyond these six years. So, even if you had a lucrative period with multiple businesses years ago, the IRS is focused more on the recent six-year window.
Steps to File Your Unfiled Returns
1. Gather Your Records:
– If you are a W-2 employee, you can access your transcripts via the IRS portal. These transcripts will provide the necessary information to reconstruct your tax returns for the years you missed.
2. Reconstruction of Returns:
– Even if you lack some documents, seasoned tax professionals can help reconstruct your returns using available data such as bank statements or other financial records.
3. Filing the Returns:
– Once your returns are prepared, file them to regain compliance. This step is crucial in preventing the IRS from initiating further action against you.
Why Filing Is Critical
Avoiding the IRS might seem like a feasible strategy in the short term. However, the IRS has increased enforcement efforts, including the deployment of more Revenue Officers who are actively pursuing non-filers. By proactively filing your back taxes, you can avoid unwelcome visits from these officers and significant financial penalties.
Peace of Mind Through Action
From my experience, I can assure you that most cases do not require audits when returns are accurately filed. The IRS typically moves on once they see that you are taking steps to comply with their requirements. Therefore, confronting the fear of filing and taking prompt action can save you from future complications.
If you haven’t filed your tax returns, now is the time to do so. By bringing your tax obligations up to date, you ensure peace of mind and protect yourself from potential IRS action. Should you need assistance in this process, consider reaching out to experienced professionals who can guide you through the necessary steps with precision and care.
Reach out, if you’re dealing with unfiled tax returns, don’t hesitate to take action. With the right approach and support, you can navigate back to compliance and avoid unnecessary stress and penalties. Remember, the first step is often the hardest, but it’s also the most rewarding.
Thank you for reading, and if you need help with filing back tax returns, feel free to reach out. Your journey to resolving unfiled tax issues starts today.
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