Help! I Haven’t Filed Tax Returns in Five Years. What Should I Do Now?

Help! I Haven’t Filed Tax Returns in Five Years. What Should I Do Now?

By: Moshe Klein, The AFFORDABLE Accounting Firm

www.mkabusiness.com

Believe it or not, millions of people and businesses do not file tax returns every year when they should. Some folks haven’t filed returns in a decade or more. There are lots of reason as to why people don’t file returns but that is a subject for another article.

My objective today is to share some information with anyone who may want to “get back on the grid” and bring their personal and/or business returns up to date and into compliance with the law. Besides being the right thing to do, it will likely make your life a lot less complicated as tax returns are required to secure a home mortgage, to be hired for certain jobs, file for bankruptcy or even get a divorce. For a business owner who does not file tax returns, it makes it almost impossible to obtain a line of credit or to sell the business not to mention to secure a loan from the Small Business Administration or a bank.

Is it considered a crime to not file a tax return? It certainly can be if the IRS or the government suspects that you are trying to evade paying certain taxes or to cover up illegal business activities. In most cases, the IRS is not going to pursue any criminal action when all that is needed is to file those prior year returns and pay any taxes owed. Generally, the IRS is not interested in going father back than six years, but they can if they have reason to. In many cases, some penalties and interest can be waived or abated when prior year returns are filed, especially if there is a good reason for falling behind on tax returns. When money is owed, even including penalties and interest the IRS is generally willing to work out a payment plan or even an offer in compromise settlement at less than the full amount due. In some cases, clients receive a refund when they file prior year tax returns!

If you haven’t heard from the IRS in years, don’t fool yourself to think that they forgot about you and those missing personal or business returns and, any past due tax payments owed. They haven’t. They may just not be able to locate you. At some point, when you least expect it, you can receive a certified letter from the IRS notifying you that they have or will soon freeze your bank account or put a lien on your home. Other times, they will go ahead and prepare tax returns for you using only income or revenue information that they have on file going back several years and then send you a HUGE bill for what they say is owed.

After decades of working as an accountant with many thousands of individuals and small businesses, I have just about seen it all. I am always delighted to work with clients who come to us scared because they are years behind on tax obligations and owe the IRS large amounts of money and to see their faces after we prepare those missing returns and clear the slate. The sense of joy and relief is very real. They can file returns every year like most Americans do on time and not be afraid of tax liens, frozen accounts and growing interest and penalties for unpaid taxes.

Since 1982, Moshe Klein & Associates, Ltd has been providing AFFORDABLE tax and bookkeeping services to individuals and small businesses in all 50 states. So, what are you waiting for? Give us a call. At MK&A, we do it all. Open evening and Sundays during tax season for your convenience.?