There are currently 35 million taxpayers in trouble with the IRS. When I appeared on LA Talk Radio with T.J. McCormack earlier this week we talked about income tax relief advice for the 15% of the population of tax paying adults that are in trouble with the IRS.

We’re past the April 15th tax deadline, but this is when people start thinking about the tax returns they haven’t filed. If you’re a non-filer and your conscious is starting to get to you, know that the IRS may get to you too and there are lots of compelling reasons to file your delinquent tax returns as soon as possible - including avoiding a penalty for late filing, a penalty for not paying your taxes owed,  and a penalty for accuracy-related errors on your tax return.

Not to mention, it’s a criminal offense to not file you tax returns  - even if you don’t think you
owe takes. That’s why Wesley Snipes will be doing time for his 3 years of unfiled tax returns.

And what lots of people don’t know is that if you don’t file your taxes, the IRS may prepare your tax returns for you without  you to taking any of your allowable deductions. They file what is called a Substitute for Return (SFR).

What people don’t realize when they hear that taxes are voluntary, is that it’s voluntary to file a tax return. It’s not voluntary to pay. You have to pay. The voluntary part is that if you don’t file your own tax return, the IRS will do it for you. And they’re going to do it in their best interest.

Filing a Substitute for Return

When filing a SFR, the IRS takes all your third party information (like 1099s and W-2) and they classify you in the highest possible tax bracket. For example, even if you are married, they will classify you as “married filing separate.” So even if you are married with 10 kids, they don’t give you any consideration or credit for your wife and kids. They also won’t give you consideration for any business deductions that you may have that are directly related to your 1099, any stock sales (including the basis of or the cost of those sales, and any mortgage interest or property taxes.

If the IRS files your tax return for you, you can end up with a huge tax liability. And that’s how they get your attention so that you’ll come in and file your own tax return to get it right.

Regardless of what you have heard, you have the right to file your original tax return, no matter how late it’s filed. So you can  replace an SFR return at any time - even if it’s 20 years old - and retroactively fix it.

** If you have unfiled tax returns or other IRS problems, contact our specialized staff of tax attorneys, CPAs, EAs and tax professionals. Visit the Tax Resolution Services web site  for a free income tax relief consultation or call us at 866-IRS-PROBLEMS.

More Tax Help, IRS News and Tax Relief Tips:

1. Melt Your IRS Fears Away - Tax Help if You Can’t Afford to Pay Your 2008 Taxes
2. We’ve Expanded to Help More Taxpayers Resolve Their IRS Tax Problems!
3. Have You Filed Your Taxes? Consequences Include Increased Financial Liability and Imprisonment
4. What to Expect When Resolving Your Tax Debt: Road Map to Tax Resolution
5. Avoid IRS Tax Penalties By Establishing “Reasonable Cause” For Failing to File and Pay Your Taxes

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This entry was posted on Thursday, May 7th, 2009 at 6:06 pm and is filed under Filing Unfiled Returns and Replacing Substitute for Ret, Seeking Professional Tax Help, Tax Resolution Options and Alternatives, Tax news and tips. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.