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

Some of our clients have not filed returns for a year or two others have not filed taxes 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 a reasonably accurate return that will be accepted by authorities.

There is no statute of limitations associated with the assessment or collection of back taxes, late penalties or interest on returns that have not been filed. In addition, the IRS will not issue a refund or apply an overpayment to offset the late taxes of another year if a return is not filed the later of, three years from the due date of the return or two years from the time the taxes are 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 a return by the statutory time prescribed.

The late tax liability determined on a substitute return is based on the income reported to authorities less one personal exemption and a standard deduction but ignores exemptions, credits, deductions, losses and expenses that you may be entitled to claim to reduce the back taxes, late penalties and interest.

As a consequence, a substitute return essentially computes an alleged back 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 after taking action to settle their back taxes. The following example is not an an aberration or uncommon occurrence when late 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 a willfull failure to file back taxes and/or failure to pay late taxes and IRC § 7201 provides authority for the government to charge an individual with felony evasion when an individual does not submit a late return with the intent to conceal income and avoid assessment or payment of taxes.

Thank you,

McCall, ID

Our organizational privacy and security policies guarantee that "only" contact initiated by you and required to prepare late tax returns and 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 because 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 late interest and penalties, used refunds to pay back tax liabilities and I received checks that totaled $2,971.00.

The IRS reconciles W2, 1099 and K-1 earnings reported to them by employers, banks and others against the taxpayer's social security number to monitor filing compliance and utilizes its statutory authority under IRC § 6020(b) to prepare a return for you commonly called a substitute return when an individual fails to file.

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

N.A.E.A.