How Far Back Should I Worry About Unfiled Tax Returns?

Tips for filing your unfiled tax returns successfully

There are certain legal responsibilities every US citizen has to comply with every coming year. Filing and paying federal taxes is one that is a constant cause of stress for many. The more you put off filing and paying your taxes, the greater the risk of facing consequences that are enforced by the IRS. Unfiled tax returns can really disrupt your peace and result in financial hardships. In this blog, we explore how far back you ought to worry about unfiled taxes.

1. How safe am I from the IRS?

Some defaulting taxpayers find themselves basking in a false sense of peace and safety owing to the failure by the IRS to enforce collection for an extended length of time. Most underestimate just how much time and power the IRS has to collect on a tax debt.

Understanding The IRS Statute Of Limitations

Once 10 years have passed, the IRS can no longer collect on your tax debt from unfiled taxes. What you ought to appreciate is that it isn’t as simple as it sounds. In fact, the 10-year statute of limitations on your tax debt begins only after the IRS notices the unfiled tax returns, when you file the unfiled return, or when the IRS does it for you.

This means that even after the passage of 10 years since you forgot to file your taxes, the IRS can still come after you. Plus, once the 10-year time frame starts running, lack of action instantly exposes you to penalties. There are also many situations that can restart the clock on the statute of limitations. These include filing for an appeal, OIC, or bankruptcy, and signing a waiver. In any of these circumstances, the 10-year clock automatically restarts.

Related Blog: Procedural Map to an IRS Tax Investigation

2. Should I worry about old unfiled tax returns?

In short: Yes! Not only does failing to file your taxes expose you to penalties, both civil and criminal, it also attracts many other consequences.

  • First of all, by not filing, you allow the IRS to file your taxes for you in the form of substitute tax returns. When this happens, the IRS will file as if you’re single with no dependents. Therefore no deductions will be made which will most likely see your tax debt being exponentially higher.
  • Not filing your taxes for a long time may also exclude you from getting tax refunds. Since the IRS doesn’t allow taxpayers to collect tax refunds older than three years, by not filing your taxes for longer than that, you effectively lose claim to refunds from the same period. The money will go straight to the US Treasury.
  • Additionally, unfiled tax returns prevent you from being accurately credited for the missing tax years. In the long run, this can impact you when it comes to the collection of social security and medical benefits.

Related Blog: Self-Employment Taxes You Can’t Afford to Ignore

3. Should I seek professional help with unfiled tax?

If you haven’t filed your taxes, the best thing you can do is file and pay as soon as possible. Even if a substitute return has been filed in your name, you can still act through an amended tax return. Professional tax help really goes a long way to bring out the desired result when in such situations. The more you neglect filing your tax returns the more consequences you can face. Levys, liens, collecting directly from your salary or savings, seizing assets or investment dividends, etc are all real possibilities. Once the IRS has noticed your unfiled taxes and sets out to collect, there’s little you can do to get it off your back.

File Your Unfiled Tax Returns With Nick Nemmeth’s Law Offices!

Nick Nemmeth’s tax attorneys are experts at helping taxpayers solve issues to do with unfiled tax returns. We give you the best advice on your specific circumstances and guide you through the entire process. If avoiding penalties by filing your unfiled tax returns successfully is your goal, consulting with a tax law attorney is key! Call us at 972-484-0829 for a free consultation of your unfiled tax returns case or any other tax concerns.