Did you know that many taxpayers in the U.S. are behind in filing their tax returns? When a major negative incident occurs during someone’s life, completing important tasks often falls by the wayside. One of those tasks is often not filing their income tax return. The incident could be loss of a job, a problem with substance abuse, death in the family, or a car accident. Those incidents often become the focus instead of keeping up with basic personal responsibilities. Additionally, incidents like these cause financial hardships, which can make a person decide not to file that years’ tax returns because the money need to pay taxes due on the return is not there. 

How Not Filing Tax Returns Goes from One Year to Many Years 

Often, one missed tax return becomes two, then three, and before you know it, you find yourself with multiple years of unfiled tax returns. This is then followed by IRS notices arriving in the mail, and many if not all the notices go unopened. Once things get to this point, many taxpayers develop major anxiety and fear regarding the reality of having to resolve filing multiple income tax returns all at once. 

Top Reasons Why You Did Not File Your Income Tax Returns

  • You were certain you had a tax liability and were scared about the outcome, then you chose to not complete your returns and submit them to the IRS.
  • You do not keep any documentation to complete the returns and the years of unfiled returns piled up.
  • You are overwhelmed because your marriage ended, and your former spouse handled filing your income tax returns.
  • Your tax preparer went out of business, you freaked out, you blew off finding a new one, and stopped filing your tax returns. 
  • Your total number of unfiled tax returns has overwhelmed you with anxiety and staggering incapacitating procrastination. 
  • You are extremely fearful that dealing with your mountain of unfiled tax returns directly with the IRS will cause you problems you cannot deal with. 

Did You Know The IRS May File a Substitute for Return When You Do Not File Your Tax Return?

Often, people who have not filed income tax returns keep going along the same pattern of behavior and continue not filing tax returns year after year. In these instances, the IRS will often file a substitute for return (SFR). If any income record for the person has been filed with the IRS, such as a 1099 by business, or a W-2 by an employer, the IRS will file the SFR based on the information they have available. Meanwhile, the IRS will keep mailing notices about the unfiled returns. 

A Substitute for Return Filed by the IRS May Mean You Owe More Taxes

An SFR will most likely be filed by the IRS for each year a return has not been filed. IRS SFR tax returns result in higher taxes owed because the IRS does not factor in marital status, allowed tax deductions, or possible claimable dependents. When the IRS assesses your taxes and tax return based on its knowledge of your reported income and tax payments and it figures out you are due a tax refund, it will not send you a refund check or ACH the refund into your checking account. However, if it determines taxes are due, the IRS will calculate the taxes due and begin to attempt to collect the monies owed. The question now is what steps need to be taken by you to go from being a tax return non-filer, to a person that files their back income tax returns and all income tax returns going forward? 

File Your Income Tax Return Every Year – Here is Why

  • Filing your income tax return every year is required by law. It may be a felony to not file your tax return annually.
  • By not filing a tax return it makes it close to impossible to conduct business as an adult in the United States. Many lenders require tax returns for loan approvals and most employers do background checks that pull up credit reports and county records that report tax liens and levies. 
  • If you do not file a tax return, the IRS will most likely eventually file an SFR for you and your tax liability will be higher. File your return. It makes sense. 
  • If you do not file your tax returns the federal government will not grant you a passport, making it impossible to make trips anywhere outside the United States. 
  • People who are in business for themselves will most likely see a lower check at retirement age due to reduced or zero contributions to Social Security because they are not paying anything to the system. 
  • You most likely will not qualify to obtain health insurance through the ACA or other any health insurance exchange portal because the systems require current tax return filers on record to qualify. 
  • Assisting your child with federal student loans (FAFSA) requires current tax return filers to qualify you and them. 

Filing All Unfiled Tax Returns Is Not Always Needed

The past seven years’ income tax returns are what the IRS wants to see on file. This is not a fixed rule. When the IRS files SFR returns for you, it is highly recommended you file all the tax returns for each year there has been an SFR filed on your behalf. It will most likely reduce your tax liability significantly. If there is no tax liability owed and you are going to receive a tax refund, you only need to file tax returns for the last four years. There is a law on the books that only allows tax refunds going back 3 or 4 years. 

How The Becerra Group Can Assist You in Addressing Your Unfiled Tax Returns 

1. We will investigate and assess your tax status. 

The Becerra Group will obtain the data that is available regarding your tax status. We achieve this by having you sign a specific Power of Attorney so we can obtain your tax records from the IRS, online. Obtaining your tax records online will mitigate dealing with the IRS directly, which can reduce the chances of your tax status being flagged. 

2. We will determine status, request records, complete tax returns and file them. 

The Becerra Group will decide what your status is and then figure out how many years of tax returns need to be filed. We will download your tax records from the IRS website or have them faxed to our office. We will then complete your tax returns and file them with the IRS. 

3. We can tell if the IRS filed SFR for you and if you have a tax liability.

In many instances where the IRS filed an SFR for you because you did not file, chances are you will owe more tax, hence the need to file a return. In addition, if you want to enter into an installment agreement or some other collection alternative, you returns need to filed i.e., fully compliant. You may qualify for an Offer In Compromise (OIC). When this is the case, we may not complete the returns and file them because you are going to present an OIC anyway. What we recommend you do when it comes to filing your taxes for multiple back years completely hinges on our determination of your status through a review of your tax records. 

4. We can help you act on monies owed to the IRS. 

After we have assessed your tax situation and figure out how much you owe the IRS, we will either create an Offer in Compromise to resolve the income taxes owed, figure out your hardship position, or develop a feasible written payment plan with the IRS.  

5. We will develop a plan to help you stay in compliance with the IRS going forward.

What steps will you take to stop having tax issues going forward? It may make sense to set up a corporation or an S Corporation. It also may make good sense to set up a bookkeeping system with The Becerra Group managing your books once all your taxes are filed and inline. We are committed to providing you with the services and the expertise you need so you do not develop tax issues ever again. You will not have a problem with not filing tax returns because we can provide the services you need to maintain proper books and file your taxes on time. 

The Becerra Group has your back. We know the U.S. tax system is incredibly complicated. We keep up with all the current tax regulations and tax codes and are dedicated to finding avenues for you to pay the lowest legal tax amount. Give us a call at 505-462-9090 (NM) or 830-254-4708 (TX) to discuss your tax needs.