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For one reason or another a few of us may have skipped filing our federal income tax returns.  But what happens if you do not file your taxes?  If you are delinquent, take control of the situation by coming up with a plan and protecting your rights.  The goal with delinquent tax returns is to contact the Internal Revenue Service before they contact you.  Hire a tax professional so they can instruct you on how to resolve situation in a timely and affordable manner.  No matter how overdue your returns or excuse you must always file your taxes.

Tips for Dealing with Delinquent Tax Returns

  • Contact a Tax Professional

If you receive a notice from the IRS contact a qualified tax professional for advice on how to resolve unfiled taxes.  You are entitled to tax representation in any matter with the IRS.

  • Know Your Rights and Options

Taxpayers have a set of fundamental rights such as being informed, right to appeal and retain representation.  You can read about the taxpayer bill of rights on the IRS website https:/www/www.irs.gov/advocate/taxpayer-rights.  If you cannot meet your tax obligations you can apply for payment plans, qualify for an offer in compromise and a request to temporary delay collection.  An offer in compromise means a way to settle your tax debt for less than the full amount.

  • What If You Cannot Pay?

No matter the reason for delaying to file your tax return do so as soon as possible.  The failure to file penalty can be more costly than the penalty for failing to pay.  Several repayment options include requesting an extension, setting up payment plans or an offer in compromise.  You can request an extension of time to file tax return by up to six months but it does not extend payment deadline.  The IRS may allow setting up a monthly payment plan if you owe less than $50,000 in combined tax, penalties and interest if you have filled all required returns.  Make sure you stick to repayment deadline as the IRS can revoke payment arrangements if a payment is missed.

  • Communicate and Keep Records

If you send out correspondence or payments to the IRS via mail ensure you send via certified or registered mail.  For registered and certified mail, the date sent serves as postmark date also save your receipt as proof that the return was delivered.

Penalties for Missing Deadline:

  • No Penalty if you are receiving a tax refund.  But you must file your 2017 taxes within 3 years, if you filed an extension.  After this time any unclaimed tax refunds are tuned over to the U.S. Treasury.  If you owe taxes and requested an extension while still paying tax bill by April 17, 2018 you are not penalized.
  • Late Filing Penalties apply if you owe taxes and did not file your return or an extension by April 17th.  You will also receive a late filing penalty if you filed an extension but failed to file your tax return by October 16, 2018.  The late filing penalty is 5% of additional taxes owed for every month your tax return is late, up to a maximum of 25%.  If you file more than 60 days after due date the minimum penalty is $205 or 100% of unpaid taxes, whichever is less.
  • Late Payment Penalties apply if taxes owed were not paid by April 17, 2018 whether you filed an extension or not.  Penalty is 0.5% of the additional tax owed amount for every month owed taxes go unpaid.  For any month, where both late payment and late filing penalties apply, the 0.5% late payment penalty is waived.
  • Interests start accumulating on unpaid taxes one day after the due date of return until bill is paid in full.

Contact our offices if you need any assistance filing past tax returns or to answer any questions you may have.