In the United States there are literally hundreds of thousands of people who have fallen behind in filing annual tax returns. Many of those who haven't filed suffer with the worry that the next knock at the door will be an IRS agent.
Much of this worry is misplaced, and for a number of reasons:
- The IRS has a voluntary disclosure policy that promises no prosecution if returns are filed before prosecution begins, (see Frequently Asked Questions For Past Due Return Filers at the www.IRS.gov for more).
- The non filer may be able to recreate returns using IRS records, comparable numbers and good faith estimates even if there are few records.
- The process required to complete the returns is one that millions of taxpayers have gone through. It can be done relatively quickly.
- There are a number of legal ways to deal with any debt resulting from the return filing.
Despite the above, the IRS can and does selectively prosecute for willful failure to file or worse, tax evasion. When they do prosecute, they are very successful in obtaining a conviction and jail time against the non-filer. The non -filer faces other less serious and more common consequences for the failure to file, including the loss of tax refunds, earned income credit, social security benefits, loss of ability to discharge tax debt in bankruptcy, as well as increased debt as a result of penalty and interest.
It's necessary to have someone with experience help when dealing with un-filed returns as there are legal issues that must be confronted like:
- How many years should be filed.
- Statute of limitation law and it's relation to substitute returns.
- Bankruptcy issues related to debt arising from late returns.
- Attorney client privilege issues.
We have counseled hundreds of clients in relation to their missing personal and business related tax returns and deal effectively with the resulting debt. We encourage our clients to use their CPA or one that we suggest, but only after we become involved in order to protect the attorney client privilege and to ensure only the returns that need to be filed are completed.
If you are behind in filing you can call the office to discuss your situation for free over the phone.