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February 17, 2015


If your taxes are past due, should you still file?

Tax-filing season for this year still has a couple of months ago. But what if you still have not filed taxes for previous years?

In this post, we will explain how important it is to put a plan in place to address past-due federal taxes.

One possible consequence of not filing on time is a non-filer investigation by the Criminal Investigation (CI) division of the IRS.

But even when there are no allegations of tax evasion, the penalties and interest charges for unpaid taxes are significant. When you don’t file, you also open yourself up to collection actions by the IRS, such as liens against your property or garnishment of your wages.

The IRS may take such actions after filing something called a substitute return. As we explained in our article on past-due tax returns, can use a substitute filed return (SFR) to estimate the tax liability of a non-filer.

When the IRS prepares a substitute return, however, it does not always give you the benefit of the doubt on tax deductions, credits or deductions you may be eligible for. This means that the SFR may show a higher tax liability than you would have had if you had filed your own corrected return

In short, there are numerous reasons why a filing past-due return is generally a sensible step for a taxpayer who missed the original filing deadline. Indeed, in some cases it may even be possible to claim a refund.

Of course, in some cases it will be necessary to pay considerable amounts in back taxes. But it may be possible to resolve that debt by working out an offer in compromise (OIC) or an installment agreement with the IRS

Tax Evasion