Sitting On One Or More Unfiled Tax Returns? Helpful Tips For Getting Right With The IRS

Even though federal law states that Americans must file and pay income taxes annually, there are a surprising number of people who are currently sitting on one or more unfiled tax returns.

For some, a failure to file their income tax return might be attributed to events in their life that made filing a great hardship, such as a death or major illness in their immediate family. For others who fail to file, however, it may simply be that they forget to file or want to postpone filing until they have more time or money to do so. 

Filing taxes and paying taxes are separate issues

If you have not filed your annual income taxes in the past or you are considering not doing so this year, it is important that you understand that failure to file and failure to pay are two separate issues. While paying any federal and state taxes you owe is required under the law, you must still file the return on time even if you cannot include payment at that time. 

Payment plans are offered through the Internal Revenue Service to help financially stressed taxpayers more easily meet their tax obligations. In most cases, taxpayers are charged interest on the amount of back taxes they owe, as well as a late payment penalty on the balance, but the plans do offer a way to stay current. 

The Internal Revenue Service is much less accommodating when taxpayers fail to file. Taxpayers who fail to file should expect to be charged compounded daily interest on the outstanding tax bill, as well as substantial penalties. Unfiled tax returns can eventually result in wage garnishments, liens on bank accounts, and even criminal charges. 

Going it alone is not a good plan

Whether it is unfiled tax returns for one year or several, dealing with any income tax problem on your own is rarely a good plan. This is especially true since the tax law changes have now gone into effect, further complicating the process. Tax laws can be confusing, and taxpayers may not fully understand them or have the time and resources to handle the complexities they may face when trying to file returns for one or more previous years. 

To learn more about the steps you will need to take to successfully deal with unfiled tax returns, set up payment plans, correct payroll exemptions, or any other income tax problem, discuss your situation with a tax service in your area as soon as possible.