When it comes to pursuing taxpayers that are out of compliance with the tax laws, the IRS considers unfiled tax returns a priority. The IRS sometimes prepares tax returns on behalf of delinquent filers. The IRS refers to these returns as ‘substitute for returns’, or SFRs. Since the IRS prepares these returns with the limited information it has on hand, SFR returns often result in tax liabilities and penalties that are significantly overstated.
Failure to timely file a tax return with the IRS will result in a filing penalty and interest. The failure-to-file penalty is usually five percent (5%) of the unpaid taxes for each month, or partial month, the tax return is late, up to 25%. When the return has balance due, the IRS will also apply a failure-to-pay penalty for each month or part of a month the tax remains unpaid. Taxpayers with reasonable cause may qualify for removal of the penalties and associated 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 then discuss your filing requirements with you and provide an explanation of the information and documents needed to complete the filing of your taxes. After taking into consideration all applicable deductions and credits, your individual and/or business tax return(s) will be prepared and submitted to the State and IRS taxing authorities. Where appropriate, we will pursue abatement of any penalties, such as the failure-to-file penalty, and then follow up to resolve any balance due on the tax return. Because filing compliance is a prerequisite for all taxpayers with back taxes and other tax disputes, preparing and filing your taxes is usually the first step in getting your tax matter resolved.
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