Unfiled Tax Returns – A Handy Guide

As you probably know, when it comes to unpaid taxes, the IRS always gets its man. There are many things you should never do in life, including things such as: Never eat yellow snow, never look a gift horse in the mouth, and never go camping when there are hungry bears in the area. Another thing you should never do however, is fail to file your tax returns on time. If you do, you run the risk of getting on the bad side of the taxman, and when that happens, there is only going to be one winner, and that is not you. But is there anything specific you need to know about unfiled returns, other than the fact that they should be avoided at all costs? The answer to that question is yes, which is why we’ve compiled this handy non filers guide for you below. If you’re looking to read up on unfiled tax returns, or simply want to make sure you fully understand the risks, here’s a look at everything you need to know about unfiled and late tax returns.

Is it against the law to fail to file your tax returns? – When it comes to taxes, it seems that everybody you speak to is an expert on the subject. Some will tell you to get them filed on time, with plenty of time to spare, while others will tell you that last minute is best. Some will even tell you that you don’t need to bother filing at all. So, who do you believe? Well, you should consult a professional tax service and seek expert advice from people that actually know what they are talking about. Contrary to popular belief, wilful failure to file a tax return is indeed criminal, and is therefore against the law. Those found guilty will not only face a fine of up to $25,000, they also could face one year in jail. Yes, it really is that serious. Worst of all is the fact that if you fail to file your taxes for more than one year, each year that you fail to file them will result in each unfiled return being classed as an individual misdemeanour.

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What about late filing? – To be honest, when it comes to tax returns, we all know when we need them done by, and we certainly have enough prior notice to get our books taken care of, so there isn’t really an excuse for late filing. Despite this however, time can creep up on us and we sometimes do find ourselves failing to get our taxes in on time. If you file late, you certainly are not at risk of criminal prosecution, but you definitely don’t get off completely free either. Late filing results in a late filing penalty, which is 5% of the total tax owed per month. This 5% is added per month for every month, or partial month, that your taxes are late. So, if you file them two months late, you will have to pay 10% of the tax owed, and so on, up to a maximum of 5 months. After which, the IRS is likely to take things further.

Are there any other unfiled returns penalties? – Yes there are. In addition to late filing penalties, those that fail to file their tax returns also have to pay a failure to pay penalty. This penalty is 0.5% per month, on top of the 5% per month we just looked at, so now you can see how the fines are quickly adding up. Remember, this is money on top of your taxes, so there really is no reason why anybody should fail to get their taxes filed on time and done correctly. This is yet another reason to hire our professional tax services, as experts deal with delinquent returns and late filing issues every single week, and we know the tax law and the rules inside and out. Hiring us means that we do the work, so you don’t have to, and you are actually likely to save money in the process.

What happens if you can’t pay? – As you can see, it’s easy to let things get away from you and if you’ve been failing to file your taxes for years, unfiled tax returns, and the IRS comes after you, and you still fail to file right away, the penalties will quickly add up. Many businesses fail to file their tax returns because they simply can’t afford it because they, and their business, are in so much debt. Unfortunately, the IRS is not interested in sob stories, and if you owe them money but legitimately cannot afford to pay them back, unfortunately they are not interested as they will get their money one way or another. With that said, there are agreements and deals which can be made which will allow you to pay back the money that you owe, without bankrupting yourself in the process. The most likely scenario is a monthly instalment plan, whereby you agree to pay back a certain amount of money each month, rather than everything all at once.

What about if you don’t receive your forms? – If you file your returns on paper, a lot of people seem to think that failing to receive their forms is a valid reason for not filing. In their minds, it is the IRS that made the mistake, and so they now have an excuse not to file their returns and not to pay any taxes they may owe. Unfortunately, this is not the case. You see, if your files haven’t arrived by March, it is your responsibility to get in contact with the companies that should have sent them over and to find out where they are, and to request that they re-send them. Basically, you NEED those forms and it is down to you to ensure that you receive them.

If you have unfiled and delinquent tax returns, we can help you obtain all your tax documents such as W2’s, 1099’s, 1098’s etc and also get you a small payment plan in lieu of full payment.

Get a free case evaluation today by calling us at 877-788-2937.