There are many explanations that people give for not filing tax returns on time. There may have been an unanticipated disaster, fear of filing due to insufficient money necessary, or perhaps simply the taxpayer did not understand how. No matter what the reason, it is crucial to know that the IRS or State taxing authority is virtually always going to find out. If you don't deal with the problem; you will continue to accrue penalties for not filing and interest on the balance owed once the total amount for the return has been established.
As part of a new client interview process 20/20 Tax Resolution has been analyzing client trends in this area. Below are the main reasons for not filing according to the 20/20 Tax Resolution client study (in no particular order):
- Catastrophe
- Absentmindedness
- Fault of Accountant or Bookkeeper
- Ignorance - don't understand how / or did not know when
- Did not file because of lack of funds to pay taxes
- Tax returns were not done as the tax accountant wasn't paid
If you're one of such taxpayers with unfiled returns, what should you do?? If you haven't filed returns in a while, you might be questioning how grave things might be once the taxing authorities find out. The severity of the taxing authorities’ actions depends on many variables.
One of the primary things they'll examine is how many returns are missing and if there were balances owed. The most valuable thing you can do is file your returns as soon as possible. For each day the returns are overdue, you will be charged penalties. Two things can occur once the returns are filed.
(1) If there was no money due, you will get a bill for the penalties and interest and need to make arrangements to pay the total amount|If no money was owed, you'll still be billed for penalties and interest. You will need to pay this sum}. You should obtain and Installment Agreement or alternate repayment arrangement if you cannot pay the total in full.
(2) Otherwise you will be given a bill for whatever money is outstanding on any or all of the returns. You will need to make payment arrangements without delay or else the taxing authorities might file a tax lien and start the process of enforced collection efforts.
Enforced collection comes in many types and depends on numerous diverse elements. The taxing authorities will look at the total balance owed, length of period you haven't been in compliance, whether you are filing and paying your taxes currently, and the reason you didn't file, along with various further elements.
When the tax lien is filed, the IRS has protected their interest in your assets. They might take some of these measures to collect on the debt (not comprehensive list):
- Levy bank accounts, accounts receivable or both
- Garnish wages or Social Security
- Seize property or force you to sell assets that can pay down your liability
- Lock up your business and seize its assets.
There are some ways you can get control of your tax problem. Paying the debt in full is naturally one of the best method. There are, though, a small number of taxpayers that can in fact pay in one lump sum. Even paying in two or three installments might be advantageous, if manageable. If short-term arrangements can be made, the taxing authorities may not demand you to fill out financial forms or supply verification of expenses and income. A thorough financial analysis, plus income and expense verification, and the filing of missing returns will be required before the taxing authorities will consider a longer term Installment Agreement or Offer in Compromise.
If you cannot gain control of the situation and the taxing authority is threatening to take enforced collection or already has, you likely require help from a tax professional that's well versed in taxing authority collection issues. Tax debt negotiation companies such as 20/20 Tax Resolution are well-informed of all tax resolution techniques and trained specially in tax law. For this reason, they are much more effective than an attorney or accountant that doesn't have this specialty or expertise. 20/20 Tax Resolution can work to end all threatening collection efforts and clear a path for negotiation of the liability. 20/20 Tax Resolution will negotiate all settlement terms and work toward the most advantageous outcome.
Using the services of a professional will provide you piece of mind and allow you to go on with life while the negotiations are ongoing.
Author Resource:-
Stephen Uhl is a Senior Tax Consultant at 20/20 Tax Resolution.
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