Delinquent and Unfiled Tax Returns? 8 Steps to Resolving Them

If you have unfiled and delinquent tax returns, you’re probably dreading this tax season; owing back taxes to the IRS is a big burden. Doing nothing to resolve them, however only makes matters worse and more expensive. Even if the IRS isn’t currently knocking on your door to remind you of your tax debt, you are not out of the woods and will need to devise a plan for IRS debt relief.

The IRS is an aggressive debt collector and the day will come when you will be forced to resolve those unfiled and delinquent tax return issues. Taking a proactive approach will help you examine your options for resolution but it requires your participation. Don’t let another tax season pass you by before your act!

First start by following these eight simple steps to take care of unfiled delinquent tax returns for good:

Step 1) Contact an Attorney or Certified Tax Resolution Specialist to Help You.

If your late tax returns go back for a number of years, you are probably facing up to 25% in penalties and interest; very expensive indeed. It’s in your best interest to hire expert tax advice from an attorney or Certified Tax Resolution Specialist who can reduce your back tax debt for some perhaps all of your unfiled delinquent tax returns.

Step 2) Begin With the Last Year You Filed Taxes. Go back to the last year the IRS received your taxes. You will need figures from that return to fill out your unfiled tax returns.

Step 3) Make Sure You and the IRS have the same tax documents. Your local Social Security office can provide copies of all the W-2s, 1099s and other documents pertaining to your unfiled tax return years. By cross checking your documents with what the IRS has for you, you could avoid potential IRS tax problems from occurring. Example: state tax reporting discrepancies you were not aware of.

Step 4) Determine Your Original Tax Liability. It is imperative that all the information you provide to the IRS is perfect and without any errors. These tax returns will face harsh scrutiny, and you don’t want to incur additional fines for sloppy mistakes. A tax professional can review your delinquent returns, including your state tax returns and make sure all documents are complete and in order.

Step 5) Make Sure Your Information and the IRS Estimation of the Debt Match. Have a tax professional check your version of the unfiled delinquent returns against the IRS’s estimation of your tax debt. The IRS can and does make simple mistakes on their Substitute for Returns (SFR) especially if they were unaware your tax situation changed. Ask yourself: does the IRS have an accurate picture of your tax status? If the answer is no, your tax expert will help you create a clear one.

Step 6) Send Unfiled Tax Returns to the IRS Correctly. A late tax return (or several) is too important to send electronically. Take one of the following actions to ensure receipt:

  • Hand-deliver the tax returns to your local IRS office making sure you get a receipt for each of the unfiled delinquent tax returns.
  • Send each return separately via certified mail separated by a few days, just to be safe.
  • If you were informed your late tax return is in the collections or Substitute for Return office, get the proper address and sent each unfiled delinquent tax return separately to that address via certified mail.

Step 7) Include a Partial Payment of $5 with Each Unfiled Delinquent Return. Interest and penalties for each late tax return compound with every day of non-payment (as much as 25%). By sending at least $5 for payment along with the delinquent tax returns, stops the interest clock.

Step 8) Have a Tax Resolution Expert Devise an IRS Payment Plan.

Now that you are seeing a tax resolution light at the end of the tunnel, here are the next things to consider:

  • Can you pay the entire back tax debt in full?
  • Should you pay the entire balance at once?
  • Could you qualify for an Offer in Compromise?
  • Should you try to get an IRS payment plan for your late tax return debt?

Expert tax advice will help you decide on a game plan that makes the most sense for your unique situation. A good attorney or Certified Tax Resolution Specialist often negotiates an IRS settlement for less than the original amount. Following these easy steps and dealing with your unfiled delinquent tax returns will mean you won’t have to dread tax day ever again.

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