IRS Problems, IRS Tax Problems, Tax Audit Help

Are You an Income Tax Delinquent?

July 25, 2012 - IRS Problems, IRS Tax Problems, Tax Audit Help

Did you know the Internal Revenue Service has a name for taxpayers who do not file their required income tax returns? Is that you? Do you owe the IRS a tax return? Are you a NON-FILER? If you file your individual income tax return on or before April 15th (the usual due date for 1040 tax returns) then you have filed TIMELY. If you file a special form you can REQUEST an automatic extension. But you must ask for this extension. And when you ask for the extension you will automatically be given an additional 6 months to file the paperwork. This extension does not give you more time to pay your tax. If you owe the IRS money, you want to pay that before April 15th to avoid penalties and interest. There are a lot of rules about paying your tax, but that is a topic for another blog. If you have a Partnership, the due date for the Form 1065 is also April 15th. If you have a corporation, that calendar-year C or S corporate return is due on or before March 15th. Partnerships and Corporations can also request an extension that will allow them up to September 15th to file their returns. If you have a business, maybe you missed filing a quarterly employment tax return. It is perfectly acceptable to file your returns on extension. Sometimes your circumstances will dictate you file an extension. Sometimes you make the choice  to file an extension. But the key word here is FILE or submit the tax return. If you have a requirement to file and you do not file that return, you are a Non-Filer. And by putting yourself in the position of Non-Filer, you are also putting yourself in position to attract special attention of the Internal Revenue Service. This special attention is not quite a Tax Audit, but it is certainly closer inspection. There is no typical non-filer. There are lots of different reasons you might miss that annual “look yourself in they eye” opportunity to be honest with yourself and file your income tax return on time. Life happens. Maybe you lost your job. Maybe you had a serious illness. Maybe your marriage ended in divorce. Maybe you suffered the death of a spouse or other close loved one. Something threw a monkey wrench in your life. If you are an employee who receives a W2 reporting annual income and taxes withheld, the IRS has a copy of this W2. If you are an independent contractor who receives a Form 1099 showing what you were paid, the IRS has a copy of this 1099. If you had gambling winnings or took money out of a retirement account, the IRS has a copy of the W2G or 1099R. The IRS wants to match the document they received with a tax return. And when the cannot make that match, they have identified a non-filer. Now, if you were an independent contactor who did not receive a 1099, or someone who had income but did not get the paperwork to go along with that income, it doesn’t mean the IRS is not going to contact you. It just may take them a little longer to do so. Maybe you had a casualty and lost the records you need to file a proper tax return. Maybe you became self-employed and didn’t know to keep the financial records you need to give to prepare a proper return. Maybe you cannot afford the professional help you need to help organize your records. Maybe you didn’t file one year’s return and here it is another year and you don’t know what to do now. When a tax return is filed late with a balance due the government, IRS is required by law to charge interest and will also assess penalties. One penalty is for failure to file, another penalty is failure to pay. Both are based on the unpaid tax. There is a maximum that can be assessed depending on your particular case. There are other penalties that can be assessed if negligence or willfulness are found to be a factor in your situation.. So if you are a Non-filer, and you want to come forward and file your tax returns, what do you do? You may want to consult a professional who will help you get back on track. Depending on the severity of your situation, depending on the number of years that are delinquent, you may want to consult with a tax attorney familiar with non-filing. The attorney will have attorney-client privilege. And if the attorney engages a CPA or EA to assist you in your case, that attorney-client privilege may extend to the other professionals.   As always, I wish you the lowest legal tax. Many Happy Return$ Nellie Williams, EA