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If you have any unfiled tax returns , the answer is, 99% of the time, file them, and file them now. It is better to negotiate from a position of strength, by getting to the IRS first, than filing after a collection officer contacts you. An IRS collection officer may not give you enough time to prepare your best return, and may submit your return for audit or criminal investigation, if they think something is wrong. The IRS usually only has 3 years to audit you, but the 3 years period doesn’t start until you sign or file the return. So until those 3 years are up, even if it’s 20 years after the due date of the return, the IRS can charge you with a tax liability and levy your wages, bank account, etc. to collect the money, without you doing a thing, or even knowing about it, until it happens.
You need to file any unfiled returns immediately. Even if you are missing records, afraid that there is a possibility of owing money, or you are confused about how to fill out the returns, or afraid to tell the IRS where you are, you still need to file now. O.K., not right now, we have to put a plan of action together first. That is, assuming you owe more money than you can send in with the returns. Let’s examine your choices…
You have no IRS problems other than you have failed to file one or more years of unfiled or delinquent returns. You received an IRS letter asking for the return. If you can pay the balance in full, plus interest and penalties, then send the IRS the return with your check for the money owed. Write the check out to “U.S. Treasury” and send it with the returns to the office that requested it.
The problem comes when you are either contacted by a R.O. or ACS asking for money from returns the IRS filed for you, or if the IRS sends you a cp2000 or other letter where they are proposing a liability. This could be based on a W2, 1099, K-1, etc. sent to the IRS reporting income in your behalf. Then you must take actions to refute the liability or make arrangements to establish an installment agreement or other method of payment.
