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Do You Have To File Delinquent Tax Returns?

In my practice, I often get a telephone call from a person who has not filed their tax returns for the last 5 years and they wonder if they should just ignore the IRS Letters and not worry about the delinquent tax returns.

Well, sticking your head in the sand and not addressing the delinquent tax issues is the worst course of action that a person can take for several reasons.

First and foremost you maybe losing a refund! When you file your returns you have 3 years from the due date of the return to claim your refund. For example the return for 2012 must be filed by April 15, 2013. Therefore you have three years from April 15, 2013 to file your 2012 return and receive your refund from the Internal Revenue Service. If you were to file your 2012 return on April 16, 2016, then you would lose your refund.

I recently had a client who had not filed their 2005 tax returns because he thought he would owe the IRS money. This client was getting several nasty letters from the tax agency so he came to see me and we filed his 2005 tax return. As luck would have it he was entitled to a tax refund of over $11,000.00 but since we filed the return after the three year due date, the government got to keep his money.

Another reason to always file your returns is that if you do not, then the Internal Revenue Service will prepare a substitute return on your behalf and then send you a bill for the money that they say you owe. That is right, the tax agency will use the available information that it has in its computer system and prepare a return for you. Needless to say you will always owe money when this is done, yet these substitute returns are never accurate. These substitute returns do not have your dependents, your charitable deductions or other itemized deductions that you are legally allowed to deduct on your taxes.

Yet another reason to always file your tax return is that you can possibly face a criminal charge for non-filing a tax return. Under the tax codes an individual can be charged in Federal Court for non-filing of a tax return. This is literally the worst case scenario that a person could face for non filing of a tax return.

Now the IRS generally does not seek to file criminal charges against a person for non-filing but if you have not filed your returns and own a business or are a professional such as an attorney, doctor or financial planner then the probability of a criminal charge is much higher.

Dealing with the Internal Revenue Service can be very difficult and expensive for the average person or business. You must be well prepared when dealing with the IRS. The author has over 20 years of experience in successfully helping his clients with the IRS.

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