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May 16, 2013


After a failure to file: taking steps to resolve tax debt

Like anything else, filing tax returns does not occur in a perfect world. There are many reasons why people fail to file that have nothing to do with tax fraud. Sometimes, for example, people simply get overwhelmed by life events, such as a death in the family, a serious illness or chemical dependency issues. Other times, financial challenges such as home foreclosure or job loss may be in play.

Regardless of the reason, however, taxpayers who fail to file can benefit from facing their fears and working with the IRS to resolve their tax debt issues. The same is true for state tax issues, whether those are in Texas or any other state.

If you don’t file, there can sometimes be a false sense of security. An IRS agent may not come knocking on your door on April 16, the day after the income tax filing deadline. The same is true of July 1, the day after the deadline for filing the Report of Foreign Bank and Financial Accounts (FBAR).

But the IRS has sophisticated computers programmed to ferret out who was supposed to file. If an employer sent you a W-2 form, eventually the IRS will detect that there is no record of a return to match that income.

Sometimes, failure to file taxes for one year can lead to failure to file in succeeding years as well. This could be due to feelings of shame about not filing before. But these are feelings that must be overcome in order to take action on settling your tax debt.

In our next post, we will discuss procedures such as the Offer in Compromise for resolving tax debt.

Source: “Column: Coming clean on your taxes,” Reuters, Amy Feldman, 5-14-13