The IRS considers unfiled tax returns (or delinquent returns) a priority when it comes to pursuing taxpayers that are not in compliance with the tax laws. When a taxpayer fails to file their taxes, the IRS sometimes prepares a tax return for them, referred to as a “substitute for return”, or SFR. These SFR returns often result in a tax debt that is overstated due to the limited information the IRS has to prepare the return.
The IRS can assess a penalty if you fail to file a tax return on time. The failure-to-file penalty is usually five percent (5%) of the unpaid taxes for each month or part of a month the tax return is late, up to 25%. When tax is due on the return, the IRS will assess a failure-to-pay penalty in addition to the filing penalty. Taxpayers with sufficient evidence for reasonable cause may qualify for an abatement (removal) of the penalties and related interest.
Prior to preparing your tax returns, we will examine your IRS tax records to verify which returns you still need to file. We will discuss your filing requirements with you and provide an explanation of the information and documents needed to complete the filing of your taxes. After considering all applicable credits and deductions, we will then prepare your individual and/or business tax return(s) and submit them to the IRS and State taxing authorities. Where appropriate, we will pursue removal of any related penalties, such as the failure-to-file penalty, and then follow up to address any tax due on the return. It’s important to note that the IRS requires taxpayers with back taxes and other tax disputes to file all tax returns before their IRS matter can be resolved.
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