It’s nice to feel wanted until you find out it’s the IRS that wants you. If you haven’t filed your taxes for some years, The IRS has launched a new program to identify and collect from non-filers who owe $100,000 or more. If this is you, here’s what you need to know:
Big Time Penalties
You’re looking at a minimum of 25% in failure-to-file penalties. For example, if you owe $100,000, that’s an extra $25,000. Let it go too long, and you could face a 100% civil fraud penalty, effectively doubling your debt.
Missing Out on Refunds and Credits
If the IRS owes you money, you have just three years to claim it. After that, it’s gone. Plus, you’re missing out on tax credits that could lower your tax bill or even result in a refund.
Impact on Social Security and Loans
Not reporting your income affects your future Social Security benefits, potentially lowering what you receive when you retire. Also, good luck getting a loan or mortgage—lenders want to see your recent tax returns.
IRS Actions
The IRS can file a return for you, but it won’t include any deductions or credits you might qualify for, so you’ll owe more. They can also place liens on your property or garnish your wages.
How to Fix It
If you haven’t filed for many years, the problem might seem insurmountable, but maybe not. The Internal Revenue Manual has a special just for you. You are only required to file the last 6 years of returns. Voluntarily filing those 6 years will almost certainly remove the possibility of criminal actions and the civil fraud penalty. Can’t pay it all at once? An Installment Agreement lets you pay over time. If things are really tough, you might qualify for an Offer in Compromise to settle for less than you owe.
Get Professional Help
This can be complicated, so consider getting help from a tax professional or attorney. They can guide you through the process and deal with the IRS for you. It’s always safer to have someone else do the talking with the IRS for you.
The Criminal Factor
Ignoring this problem can lead to criminal charges. By acting now, you show good faith, which can help if things get serious.
In short, dealing with years of unfiled taxes is tough but doable. Take action now, get some help, and you can get back on track and breathe easier.
