Late Tax Returns? Here’s How To Catch Up.
Updated: Mar 11, 2021
Every year, about 8 million Americans who have filing obligations simply don't file; there are literally millions of Americans who haven't filed taxes for years but need to.
If you are one of these millions stop waiting! Although it may seem intimidating, scary or embarrassing you are not alone. Every year my practice has walk in clients who need to file going back a year, or two or five. Some got busy with work and just let it go, some had family or health issues, and others just didn’t want to pay. Whatever your situation, there is a well established way to get through this!
In fact, the IRS can be fairly easy to deal with in many situations. But the longer you wait the more you will owe and the tougher the IRS will get. Eventually the IRS will file missing returns for you (without any deductions) and engage in aggressive collection tactics. Even tax payers who are already in collections can gain peace of mind, certainty and better terms by filing their late returns and negotiating a payment plan. The “do nothing” path is the hardest most expensive option and the IRS made it this way on purpose.
If you owe less than $50,000 the IRS will routinely approve a payment plan with terms up to 6 years. If you owe more than $50,000 the IRS will still usually approve a payment plan with additional disclosure and information regarding your ability to pay. See IRS Form 433a (individuals) or 433b (businesses). Form 433f includes information on both but is only 2 pages long and used for automated collections. Taxpayers on a payment plan still get hit with interest and failure to pay penalties, but the failure to file penalty stops and other collection efforts usually stop too.
When there is doubt if the tax is actually owed, or if the tax payer is not able to pay, IRS may accept an amount less than what is owed using an Offer in Compromise. However, “Fresh Start” OICs are not as easy as TV and radio advertisements often imply.
Here are the six steps to get caught up on filing late tax returns:
Order and review your IRS transcript
Request a delay in collection if needed
Reconstruct any missing business records. Identifying your allowable deductions is important for catch-up tax returns because they reduce the tax AND lower the amount of interest and penalties owed.
Prepare and file your federal and state tax returns
Request a payment plan if needed
Request abatement of any penalties when eligible
If you are behind on taxes or have other tax issues contact Cunningham CPA today. Cunningham will quickly and effectively work to resolve your IRS issues. Call or email today for a free consultation and learn more about your options.
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