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Unfiled tax returns going back a dozen years…do I really need to file all of them?

Posted by Michael S. Anderson | Aug 19, 2013 | 0 Comments

If you have unfiled tax returns, I'm not going to Judge you.  I have helped hundreds of Arizona clients deal with unfiled return issues and have learned that at least in Arizona, the failure to file a return is usually the result of emotions and thoughts we all have at some point in our lives.


1.  Fear

You may have been afraid to file a return that has debt associated with it.  Especially if finances are low and there are children or other priorities at the time.

2.  The snowball effect

The first return is filed late and “lo and behold” no one showed up at the door.  So when the next year's return due date rolls up…you put that filing off as well.

3.  Lost Records

Now a few years have gone by…and the IRS sends a letter asking where the returns are.  A little panic sets in as records are searched and you find that many are missing.


Now…I don't like to lecture anyone about why they should have filed either and don't do it in person with clients.  This is because everyone already knows that the disclosure of personal income and budget information is legally required and failure to do it can be considered a serious crime.  There are other reasons that you need to be aware of if you aren't already about filing the return(s):

1.  Substitute Tax Returns

The IRS will usually do a return if the original isn't filed.  It won't take deductions and the debt will often be much higher than if the Tax Return was filed correctly.  The Substitute Tax Return assessment causes other problems as well.  It starts the IRS collection machine rolling which includes the filing of Liens and the issuance of Levies, but it may also cause the principal debt to be non-dischargeable in bankruptcy even if the correct return is done later.

2.  Marriage

If marriage is a goal and unfiled tax returns exist, the potential marriage Partner, may have some serious second thoughts as a result.

3.  Financial Issues

Filed returns are a pre-requisite to getting a home loan or filing for bankruptcy.  If the IRS has done a Substitute Return and debt exists as a result, the IRS will have likely filed a Tax Lien which will complicate your financial life as well.


Having said all that, the real question again is… do you need to file each year if there are lots of unfiled years?

The short answer is usually no.  If the returns aren't filed at all, either by the IRS or by you, the IRS is usually only looking for the last 6 years to be on file.  If the IRS has done years for you that are older than this, it may make sense to replace those returns with correct returns.

We tend to go through a specific process with each client in order to determine which years need to be done and that same process helps to deal with the debt.


1.  Analyze IRS History

We gently attempt to determine your filing record and obtain Income History documents from the IRS.  This is usually done by contact with the “Batline” or the Tax Practitioner Hotline which is supposed to be neutral.  This initial foray into your records tells us a lot:

a.  What years are missing

b.  What years the IRS appears to be interested in

c.  What years the IRS has done Substitute Returns on

d.  Statute of Limitations period(s)on collections

e.  Bankruptcy Discharge Dates

f.  A history of your dealings with the IRS

g. A record of all the income, mortgage interest etc.  that was reported

h. The status of IRS Collection activity

i.  The status of Lien Filings

When we know these things it is much easier to determine which years need to be done.  Sometimes, very few returns need to be done and that will depend on a number of factors.

2.  Analyze Personal Finances and Goals

Sometimes the decision as to which returns need to be done depends on your personal finances.  If you are a candidate for an Offer in Compromise and the IRS has done several substitute tax returns…it may not make sense to correct them.  A thorough review of your financial situation, past, present and future, will tell us whether an Offer in Compromise is feasible, or whether a bankruptcy makes more sense or whether a payment plan in conjunction with the IRS Statute Period on collection or a later Bankruptcy makes the most sense.  Which returns are done, often depends on what legal option makes the most sense as well.

3.  Creation of Returns

Once we know the above, we can make a final decision about the returns and get them created.  We can often do this even if you don't have perfect records.

4. Dealing with the Debt

The work that took place to analyze the IRS history and your financial situation is now used to create documents and arguments that will help reduce or eliminate the debt. Again, the Offer in Compromise may be the best option but there are others that may make more sense in the end.


If you have multiple years of unfiled tax returns and don't know what to do…do something.  I advise that you call me or another attorney who has alot of experience with these issues and get your IRS History and your financial situation reviewed.  Only when you do this, can you really know which returns need to be done and start the process of dealing with it.

Michael Anderson, Tax Lawyer In Arizona Michael Anderson, Tax Lawyer In Arizona Written By:

Anderson Tax Law 2158 N. Gilbert Rd. Ste 101 Mesa, Arizona 85203

Phone: (480) 507-5985 Fax: (480) 507-5988 Email: [email protected] Website:

About the Author

Michael S. Anderson

Michael Anderson has been representing Arizona clients with tax debt problems for two decades and has helped his clients eliminate millions of dollars in tax debt. His tax debt practice is limited to helping individuals and the self-employed who have serious IRS problems.


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