Catching up with unfiled tax returns

Every tax season, the IRS receives millions of paper and e-filed returns. However, not every taxpayer submits a return, and some Texas residents may fail to file for several years. The willful failure to file a return could lead to fines, penalties, and criminal charges. So, it seems advantageous to deal with those unfiled returns.

Taking action on unfiled returns

Ultimately, the 7.5 million taxpayers who fail to file returns each year might make things far more difficult for themselves. A taxpayer who is entitled to a refund could lose the money owed if they wait too long. When someone who owes tax obligations does not file a tax return, they could face fines, penalties, and interest for failing to pay taxes and failing to file a return. Persons who owe significant sums and aren’t filing returns might become subject to a criminal investigation.

The IRS will accept late returns. So, perhaps filing those late returns right away may be advisable. After all, not filing doesn’t could lead to the IRS filing a return on someone’s behalf, but penalties and interest would accrue. Plus, the IRS doesn’t know what deductions apply, so expect a higher tax bill.

Setting up a payment plan

Some people don’t file tax returns because they do not have the money to pay what they owe. Refusing to file creates a possible snowball effect where they stop filing for several years, compounding the problem.

Taxpayers may not realize that the IRS allows installment agreements and offers-in-compromise. Someone struggling to pay a tax debt has options.

Anyone filing late or on time should ensure all returns are accurate. Rushing to file an error-riddled return may open doors to costly audits. Filing false returns could result in legal troubles.