While the primary focus of this discussion is related to IRS back tax returns there are comparable State statutes and this discussion is therefore applicable to State liabilities, penalties and interest.

Some of our clients did not file for a year or two others for 10 years, or more. No matter how far behind you are our Accountants and Enrolled Agents will postpone collection activities, retrieve lost documentation from State and IRS databases, banks and others and use audit techniques to prepare reasonably accurate returns for filing, that will be accepted by authorities.

There is no statute of limitations associated with the assessment or collection of a liability, late penalties or interest on returns that have not been filed. In addition, the IRS will not issue a refund check or apply an overpayment to offset the taxes of another year if filing does not occur the later of, three years from the due date of the return or two years from the time the taxes were paid. In essence, any refunds and offsets that you may have been entitled to receive are forfeited to the IRS if you do not file by the statutory time prescribed.

The liability on a substitute return is based on the income reported to authorities less one personal exemption and a standard deduction for a single individual but ignores exemptions, credits, deductions, losses and expenses that may be claimed to reduce your liability, penalties and interest.

As a consequence, the demand for payment received represents an alleged back tax liability that is rarely correct and the vast majority that file back tax returns are amazed to find out how insignificant their problem really was or how easy the problem was to resolve. The following example is not an aberration or uncommon occurrence when late tax returns are filed.

Though rarely enforced, Internal Revenue Code (IRC) § 7203 provides authority for the government to charge an individual with a misdemeanor when there is willfull failure to file and/or failure to pay and IRC § 7201 provides authority for the government to charge an individual with felony evasion when an individual does not file a late return with the intent to conceal income and avoid assessment or payment of back taxes.

Thank you,

McCall, ID

Our organizational privacy and security policies guarantee that "only" contact initiated by you and required to settle your back taxes will occur at any time, now or in the future.

I thought I had big problems and did not file for several years. I felt overwhelmed by both the process and the amount that State and Federal officials said I owed. Your staff was courteous, knowledgeable and promptly answered my questions. You prepared my returns, substantially reduced the interest and penalties, used refunds to offset delinquent taxes and I received refund checks that totaled $2,971.00.

The IRS reconciles earnings reported to them by employers, banks and others against an individuals social security number to monitor filing compliance and they utilize their statutory authority under IRC § 6020(b) to prepare substitute returns when an individual fails to file.

Note: Statutes of limitation for refunds vary from State to State.

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