In almost all situations, the most important thing is to file your tax
returns, even if you don’t have the money to pay. It will almost
never hurt you to file your return and almost always hurt not to file.
Once you file your return(s), you are “in the system” and
the IRS (or the FTB, EDD, or BOE) will be much easier to deal with. Nonetheless,
people get scared and still don’t file. That fear works to my advantage
because they then come to me for my experience and because I’m comfortable
talking to the IRS and the other tax agencies.
How Many Years Of Not Filing Taxes Can Be Considered Dangerous?
The longer you go, the worse it will be. The greater the number of dollars
you owe, the worse it is. It goes hand in hand. Some people haven’t
filed for 20 years. These sometimes are people who have barely made enough
money to live on. In that scenario, I advise them to let go of their fears
and come clean with the IRS. 20 years is an extreme example. Many people
haven’t filed a return for 10 years. In cases like that, it is advisable
to prepare returns for the last six years. In my experience the tax authorities
generally won’t insist on going back more than 6 years. I say “generally”
because there are exceptions if the taxman thinks you’ve committed
fraud or otherwise misrepresented your situation
Unfortunately, the bottom line is that if a return has not been filed at
all, there’s no statute of limitations. The IRS (or the state) can
go back as far as they want. Coming forward voluntarily and cooperating
is the best way to go in almost all situations.
Does The IRS Ever Give Amnesty or Other Relief?
The IRS does have various amnesty programs. For example, sometimes people
fail to report offshore or foreign bank accounts or they have other sources
of income from outside of the country. The penalties for such an omission
can be extremely harsh, but for some taxpayers amnesty may be available.
In addition, the IRS as well as California’s FTB, EDD, and BOE all
have authority to reduce or eliminate tax penalties if there is “reasonable
cause” for the penalty. Whether one’s penalty is due to reasonable
cause depends on the facts of the situation. My years of experience have
provided me with an understanding of what “causes” the tax
authorities consider “reasonable.” This allows me to strongly
advocate on behalf of my clients for relief from tax penalties.
For more information on
Un-Filed Tax Returns, a free initial consultation is your next best step. Get the information
and legal answers you’re looking for by calling
(510) 444-4430 today.