Unfiled Tax Returns
Once you have missed filing a tax return, it is easy to become nervous about the consequences and neglect to submit a return in future years as well. Of course, this only compounds the problem because the Internal Revenue Service (IRS) adds penalties and interest to the amount it thinks you owe, in addition to starting collection activities against you. It also files a Substitute for Return (SFR) for all missing tax years. The problem with the government filing an SFR is that it does so with its own best interests in mind, not yours. That means you are unlikely to get all of the credits and exemptions you are entitled to receive.
Having the federal government file an SFR for you can affect your state income taxes, even if you got those in on time. That is because the amount of tax assessed at the state level depends on your federal Adjusted Gross Income (AGI). If your AGI is artificially high because the IRS filed an SFR for you, your state will assign you a higher tax liability and bill you accordingly.
Working to settle with the IRS alone is stressful. However, you can alleviate much of that stress by hiring our agency to work on your behalf. At Tax Resolution Services, most of our employees previously worked as IRS agents, and we want you to take advantage of our agency’s insider experience. We understand how the system works from the inside, and our Enrolled Agents are eager to help you secure an agreement that will also satisfy the government while keeping your life as normal as possible.
Preparing Tax Returns for Previous Years
The best way to avoid all of these problems with the IRS is to file all missing returns from previous years as soon as possible. This is true even if you currently don’t have the money available to pay the balance due on any of your old tax returns. Unfortunately, the process can be quite complicated. Before you file anything, you need to track down old W2 and 1099 statements, mortgage interest statements, childcare expenses, and all other documents that you normally need to file a tax return. If you can’t locate your wage information, you will need to request a wage and income transcript from the IRS.
Things become even more problematic for those who are self-employed. You will have to recreate old records to the best of your ability or hire a forensic accountant to do it for you. This can be a costly and time-consuming process. It is only after you have done all of this that you are ready to attempt to recreate your tax returns from previous years.
The good news is that this will satisfy the IRS requirement to file. The bad news is that the IRS may not accept your new amounts owed as legitimate. If you attempt to reach an agreement for payment of unfiled tax returns, it’s likely to favor the IRS and not you. That means you could be on the hook for catch-up payments that are beyond your ability to pay. However, hiring our agency’s insider experience means you can reach an agreement with the IRS that doesn’t break your bank.
Work With a Enrolled Agent to Reach an Acceptable Compromise
At Tax Resolution Services (formerly Yarborough Professional IRS Debt Solutions), our Enrolled Agents have decades of combined experiences helping taxpayers get current with their unfiled tax returns. Furthermore, many members of our staff previously worked as revenue officers and have a unique understanding of how the agency works. This is essential when it comes to approaching the IRS as your representative to compromise on a plan of repayment. Other tax professionals, such as a Certified Public Accountant (CPA) or a tax attorney can do this as well, but they lack the inside knowledge of the types of arrangements the IRS is likely to accept or deny. They also lack the focus we can provide to your situation as we work solely with taxpayer debt settlement.
While it is easy for you to feel intimidated by the IRS as a taxpayer, we know from experience which actions are legal and which are merely scare tactics, thanks to our firsthand experience as federal agents. Our goal is to protect your cash flow so you have enough income to meet your other responsibilities and maintain a decent standard of living. We also understand the perspective of the IRS and work hard to find a solution that it finds acceptable. Contact us today for a free consultation.