Unfiled Returns

There are many reasons why people fail to file required tax returns: ignorance of filing requirements, lack or loss of tax records, and the need for competent tax advice certainly account for some of them. Whatever your reasons are for not filing any required tax returns, Tax Muscle can help.

Filing your unfiled tax returns is important for several reasons, including the following:

1. Maintain Compliance
   
   To remain current with your compliance obligations, you must file all required tax returns. Individuals and businesses who fall out of compliance with their tax obligations lose the ability to pursue tax settlement through the most popular and effective resolution programs until they reestablish full compliance. For example, your efforts to reduce and pay or fully pay your tax deficiency through participation in the offer in compromise or installment agreement programs, respectively, or to receive first-time or reasonable cause abatement of a penalty assessment will not advance unless you are in full compliance with your tax obligations when you apply for such relief.
   
   
2. Avoid Interest and Penalties
   
   File your past due return and pay now to limit interest charges and late payment penalties.
   
   
3. Claim a Refund
   
   You risk losing your refund if you don't file your return. If you are due a refund for withholding or estimated taxes, you must file your return to claim it within 3 years of the return due date. The same rule applies to a right to claim tax credits such as the Earned Income Credit.
   
   The IRS holds income tax refunds in cases where its records show that one or more income tax returns are past due. This hold remains until the IRS gets the past due return or receives an acceptable reason for not filing a past due return.
   
   
4. Protect Social Security Benefits
   
   If you are self-employed and do not file your federal income tax return, any self-employment income you earned will not be reported to the Social Security Administration and you will not receive credits toward Social Security retirement or disability benefits.
   
   
5. Avoid Issues Obtaining Loans
   
   Loan approvals may be delayed if you don't file your return. Copies of filed tax returns must be submitted to financial institutions, mortgage lenders/brokers, etc., whenever you want to buy or refinance a home, get a loan for a business, or apply for federal aid for higher education.
   
   

Consequences of Failing to File Voluntarily

1. Substitute Return
   
   If you fail to file, the IRS may file a substitute return for you. This return might not give you credit for deductions and exemptions you may be entitled to receive. Subsequently, the IRS will send you a Notice of Deficiency CP3219N (90-day letter) proposing a tax assessment. You will then have 90 days to file your past due tax return or file a petition in Tax Court. If you do neither, the IRS will proceed with its proposed assessment. If you receive notice CP3219N you cannot request an extension of time to file with respect to that tax year.
   
   If the IRS files a substitute return, it is still in your best interest to file your own tax return to take advantage of any exemptions, credits and deductions you are entitled to receive. The IRS will generally adjust your account to reflect the correct figures.
   
   
2. Collection and Enforcement Actions
   
   The substitute return the IRS prepares for you (its proposed assessment) will lead to a tax bill, which, if unpaid, will trigger the collection process. This can include such actions as a levy on your wages or bank account or the filing of a notice of federal tax lien. If you repeatedly do not file, you could be subject to additional enforcement measures, such as additional penalties and/or criminal prosecution.
   
   

Help Filing Your Unfiled Returns

If you need help filing your unfiled returns, call Tax Muscle at 855.829.6875 for assistance. By appointing us as your representative, we can obtain certain documents you may not possess but are necessary for purposes of filing your returns. Such documents may include tax transcripts from a prior year or wage and income transcripts relative to any unfiled tax year. All these documents in combination with your contemporaneous or reconstructed books and records will allow us to prepare your unfiled returns strategically and accurately.