Avoid Steep Interest and Penalties from Accumulating on Delinquent Tax Returns

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Avoid Steep Interest and Penalties from Accumulating on Delinquent Tax Returns

Unfiled delinquent tax returns can weigh on you like a disease, year after year, compounding fear until you feel hopeless. If you've got a delinquent tax return, follow the simple steps outlined in this article to prevent additional interest and penalties from accumulating!

Steps

  1. Start with the last year you filed taxes. Go back to the last year the IRS got your taxes. You'll need figures from that return to fill out those unfiled tax returns.
  2. Make sure you have all the tax documents the IRS does. Go to your local Social Security office to get copies of all the W-2s, 1099s and other documents for the years you have unfiled tax returns. The IRS may have gotten a document that you didn't and this could be the source of some of your unfiled income tax return problem. For example, you may have worked with an out of state client and that may have meant you needed to file a tax return in that state. A good tax attorney or Certified Tax Resolution Specialist can help you recreate your late tax return paper trail.
  3. Figure out what your original tax liability would have been. The IRS Website has downloadable forms and instructions going back to 1980 here: http://www.irs.gov/formspubs/article/0,,id=98339,00.html. You must also get tax forms for your state. (The state tax offices can be found here: http://www.aicpa.org/yellow/yptsgus.htm). If you can't get the forms for your unfiled delinquent tax returns online, you may have luck going to the library (call the reference desk first) to see if they have the IRS forms you need from the previous years.
  4. If they don't have the late tax return forms for the years you need, contact a tax attorney or Certified Tax Resolution Specialist for the tax return forms for the years you need.
  5. Verify that the IRS and you agree on the unfiled tax returns. Once you have prepared the late tax returns yourself (or had a tax preparer do it), have a tax attorney or Certified Tax Resolution Specialist check your version of the unfiled delinquent tax returns against the IRS's estimation of your back tax debt.Sometimes the IRS makes simple mistakes on their Substitute For Returns. The IRS may not know if you've had kids in the interim, or that your tax situation has changed substantially. A tax attorney or Certified Tax Resolution Specialist will interview you to determine whether the IRS has an accurate picture ofyour tax status.
  6. Send your unfiled tax returns to the IRS the right way. Any late tax return is too important to send electronically. Go to your local IRS office and hand deliver each return. Get a receipt for each unfiled delinquent tax return. If that doesn't work for you, then send each return separately via certified mail.
  7. Just to be safe, send each unfiled tax return separated by a few days. Also note if you are told that your late tax return is in the collections or SFR (Substitute For Return) office. Be sure to get the proper address and sent each unfiled delinquent tax return separately to that address.
  8. Send in each unfiled tax return with a check for $5.Your interest and penalties for each late tax return compound with every day of non-payment (as much as 25%). Stop that clock as soon as you can by filing those unfiled delinquent tax returns.
  9. Devise an IRS payment game plan. Can you pay your unfiled tax return back tax debt in full? Should you? Should you try for an Offer In Compromise? Should you try to get an IRS payment plan for your late tax return back tax debt? Expert tax help from a tax attorney or Certified Tax Resolution Specialist can help you decide on the game plan that makes the most sense for you. Remember that a good tax attorney or Certified Tax Resolution Specialist can often get you an Offer In Compromise tax settlement that will be pennies on the dollar.

Sources and Citations

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