Whether an Austin resident can pay his or her tax bill in full or not, tax returns are due in a timely manner. Unfortunately, if someone is unable to meet their tax liability, they might neglect to file a return and end up facing a number of consequences instituted by the Internal Revenue Service (IRS).

The first step the IRS can take is to file a substitute return on behalf of someone who has not filed timely. However, this return will most likely not give the applicable deductions and entitlements one is supposed to receive. The IRS sends a Notice of Deficiency proposing a tax assessment, after which one has 90 days to either file or petition the tax court.

If the delinquent filer does not respond, the IRS will continue with their assessment. This assessment will have a tax bill, which if not paid, will trigger a collection process.

There are a number of reasons individuals should file past returns, including avoiding the collection process. If a return is not filed, the filer runs the risk of losing their refund. If the IRS records show that one or more income tax returns are past due, then tax refunds are withheld. Additionally, filing tax returns for self-employment can protect one’s Social Security benefits. Lastly, many lending institutions require previously filed returns when collecting paperwork for business loans, home refinancing and federal aid for higher education.

If one has not filed their income tax returns for a number of years, filing one now may seem overwhelming. However, it is good to remember that the Internal Revenue Service has options for IRS audit defense and appeals.