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Anthony Parent talks about the four things you need to know about filing back taxes with the IRS.
The first thing is that, if you don't file your taxes, the IRS will do something called a Substitute for Return, or SFR. Basically the IRS files their version of your taxes, assuming the worst case scenario for you as possible. They will do this after having sent you notices stating their intent to do just that, and warning you that you won't like what they do on your behalf. If you ignored these notices, we totally understand, because they can be hard to understand and sometimes really scary to you, but since we deal with them every day, it's much easier for us to deal with them.
An important thing to understand is that when you file a return to correct their version of your SFR assessment, the process is known as an "audit reconsideration." This kind of "audit" is not the same as a field audit with agents all in your business, but the IRS does give a bit of extra attention to these correction filings, so it's important that they are done very carefully. This can be done by you if you're up for it, or by a tax resolution professional.
The second thing is TIME. If you don't file your taxes, the IRS has forever to assess taxes against you. For instance if you didn't file in 1988, the IRS could, right now, file an SFR on you. By not filing, you leave a tax bill open indefinitely, while if you DO file your taxes, you set in place a limit of six years the IRS will have to assess anything additional. So it's important you act quickly.
The third thing is again time-related. If you have a refund coming to you from a return you file, you only have a limited amount of time to claim that refund when you file your return. There are two rules here: first is the two-year rule: if at any time in the last two years you've paid the IRS money, you can claim that as a refund. If you wait for more than two years to file for that refund, the IRS can keep it unless the second rule applies: the three-year rule. The three year rule is that you cannot claim a refund for a tax return that was due more than three years ago. After that, they can keep it, no matter how much it is!
The fourth thing is about documents. If you don't have all your old documents, know that we, as tax attorneys, have the ability to request old documents regarding your case from the IRS. If you are missing business documents, there are legal ways for us to reconstruct profit and loss statements that will be accepted during your audit reconsideration.
So act quickly! Don't let any of these things get in the way of taking care of your unfiled tax returns. Take action! If you're not sure you understand it well enough to do it on your own, hire a tax resolution specialist who knows how. If you've been procrastinating and just don't know what to do next, give our office a call and let us know that you watched this video and you need help with your unfiled tax returns. We'll know what you need and get you on your way to eliminating your worries by taking action on your behalf. Call 888-477-4258 or shoot an email to us at [email protected]
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