• Tammy Hoang

Tax Tips for Non-Filers

If people haven’t filed their tax returns for a number of years, they are likely anxious and find themselves glancing over shoulder periodically to see if Uncle Sam has caught up with them. Once a refund is older than three years, they can no longer be claimed and can’t be applied to other year income tax liabilities. Thus, non-filers may have the IRS jumping on them about filing or they might be missing records. They may also end of owing quite a bit to the IRS by complement interesting tips bellow:

1. Be sef-confident to pick up the phone and call the IRS

The agency will provide non-filers time to file unfiled tax returns. They can hire a tax professional to handle the situation instead of contacting the IRS directly. To illustrate, signing IRS Form 2848 Power of Attorney enables the tax pro to speak on their behalf. The tax pro can then find out if there are any Substitute Filed Returns (SFRs) on file and discover which years need to be filed. If the reason is in collections, the pro may be able to speak with that department about a suspension of collection activity while preparing the returns.

2. Don’t panic on account of lacking records

Transcripts of third party documents can requested by either non-filers or tax pro. Annual forms like W2, 1099, K-1, 1098 (mortgage interest) will be available to the tax pro, and bank records may fill in the blanks to come up with a valid tax return.

Whether non-filers having no records are self-employed, and need to file a business tax return or a Schedule C, an IRS auditor recently make a recommendation on using industry standards. There are several websites having listings by type of business of income and expenses by locale, and are fairly reasonable standards applied to business, especially if taxpayer with unfiled tax returns can provide a key element such as total sales for the year.

3. Don’t worry over bills for unfiled tax years

These statements are frequently ridiculously high and based on SFR created by the IRS. Once taxpayers file an accurate tax return for the years in question, the SFR and the accompanying tax bill disappears. So the liability may also disappear, or be reduced considerably, or be replaced with a refund.

4. Penalties can be abated

For rational grounds, you may qualify for administrative relief from penalties for failing to file a tax return, pay on time, and/or to deposit taxes when due under the Service's First Time Penalty Abatement policy if the following are true:

  • You didn’t previously have to file a return or have no penalties for the 3 tax years prior to the tax year in which you received a penalty.

  • You filed all currently required returns or filed an extension of time to file.

  • You have paid, or arranged to pay, any tax due.

Note that interest accumulated on tax liabilities cannot be abated.

5. Take the slow and steady approach

Past due balances can be threatening. If you owe a huge amount, file the tax returns in question. You will never go to jail for inability to pay when filing; however, there is always the possibility of landing in jail due to failing to file.

Approximately eight weeks after filing, you will receive a bill announcing the interest and penalties as well as the tax. The ten year statute of limitations on collections will begin running from the date the tax is assessed. There are few solutions for dealing with insurmountable balances, such as being considered uncollectible, creating an installment agreement, or if you qualify an offer in compromise.

Are you in need of professional tax or accounting services?

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