If you need to file back, delinquent or past due tax returns and work out a tax settlement contact us today.
Being former IRS agents and managers we can help you through the process and get you back on track.
We are the affordable tax firm.
We’ve been practicing since 1982 and we have a A+ rated by the Better Business Bureau.
It is critically important that you file all your delinquent or past due tax returns because the last thing you want to happen is that IRS file your tax return.
IRS will use the highest standard that it can, allow you no deductions or expenses and will proceed with enforced collection action.
If the Internal Revenue Service has contacted you with the bill, notice or a telephone call contact us today we will send a power of attorney to the Internal Revenue Service and you’ll never have to speak to them.
Ramifications of not filing back tax returns
It’s important to understand the ramifications of not filing a past due return and the steps that the IRS will take.
Taxpayers who don’t file a past due return or contact the IRS are subject to the following:
- Penalties and Interest will be assessed and will increase the amount of tax due.
- The IRS will file a substitute return for you. But this return is based only on information the IRS has from other sources. Thus, if the IRS prepares this substitute return, it will not include any additional exemptions or expenses you may be entitled to and may overstate your real tax liability.
- Once the tax is assessed the IRS will start the collection process, which can include placing a levy on wages or bank accounts or filing a federal tax lien against your property.
You will need at some point to file your own tax return to save money
Even if the IRS has already filed a substitute return, it still makes sense for you to file your own return to make sure you take advantage of all the exemptions, credits, and deductions you are allowed.
The IRS will generally adjust your account to reflect the correct figures. you can call us and ask us about IRS audit reconsideration’s.
Upon IRS working the case
The Internal Revenue Service will conduct a full compliance check which means the IRS will make sure that all filing requirements have been met.
The Internal Revenue Service will make sure that you are current in the year of contact or verify you have making your current estimated payments.
The Internal Revenue Service will want a plan of action to resolve the case.
What is a plan of action?
Any time a taxpayer owes the on delinquent or late filed tax returns the Internal Revenue Service will want to know the plan of action of dealing with the back owed taxes.
The Internal Revenue Service will request a current financial statement and you will need to put that on form 433-F.
You can find that form on our website.
IRS will usually make one of three determinations on how they will deal with the back tax debt.
After a full review of your financial statement IRS will determine that you are either:
- an economic tax hardship,
- it will insist on a monthly or current payment program plan or
- IRS may advise you that you are a suitable candidate for an offer in compromise.
What IRS looks for when working these cases – Specific factors that should be taken into account include:
- Degree of flagrancy.
- Special need to enforce compliance in a specific area.
- Whether the delinquency involves trust fund monies collected but not paid over.
Filing Back Tax Returns – The process of filing back or unfiled tax returns: Lost or few tax records
If you have unfiled tax returns, this process Fresh Start Tax LLC uses to get current with the IRS and get you immediate and permanent tax relief
1. We verbally review a year by year history of your income and expenses.
2. We review any records you may have.
3 We pull all IRS information that they have received from 3rd party sources that have been placed on the IRS computer system over the past 7 years.
4. If you have lost all your records we have easy and simple forms that can help you reconstruct your tax return.
5. We can prepare through years of experience a “reconstructed” tax return that the IRS will accept and process.
6. We review all returns for accuracy with the client and send them into the IRS.
7. We work out a settlement agreement with the IRS to permanent close your tax case.
Common Mistakes made on filing delinquent or late filed tax returns
1. Incorrectly Reporting 1099-MISC Income on Your Past Due Returns
A Form 1099-MISC is used to report payments made in the course of a trade or business to another person or business who is not an employee, also referred to as self-employed.
The form is required, among other things, when payments of $600 or more in non-employee compensation, medical and health care payments, or rents are paid. This form is filed by the payer with the IRS and a copy is sent to the person or business receiving the payment.
Unlike a W-2, there is no federal income tax, Social Security tax or Medicare tax withheld. The person or business receiving the payment is responsible for paying all taxes.
2. Self-employed individuals report their income on Form 1040, Schedule C (PDF), Profit or Loss from Business (Sole Proprietorship), or you may qualify to use Form 1040, Schedule C-EZ (PDF), Net Profit from Business (Sole Proprietorship).
You should also be aware of Form 1040, Schedule SE (PDF), Self-Employment Tax, which must be filed if net earnings from self-employment are $400 or more. This form is used to figure your Social Security and Medicare tax, which is based on your net self-employment income.
3. Not Reporting Capital Gains/Losses on Past Due Tax Returns
In general, if you had a capital gain or loss, including any capital gain distributions from sales of stock or bonds, you must complete Form 1040 and attach a Schedule D to your tax return. Refer to Publication 550, Investment Income and Expenses for more information.
4. Failing to File a Past Due Return for a Deceased Taxpayer
A personal representative (fiduciary) is responsible for filing certain tax returns for a person who has died, and for the decedent’s estate. The personal representative may be required to file the final income tax return of the decedent and any returns not filed for preceding years, the income tax return for the estate, and the estate tax return.
The final return should have the word: “Deceased,” the decedent’s name, and the date of death written across the top of the return.
Generally, the person who is filing a return for a decedent and claiming a refund must file Form 1310 (PDF), Statement of Person Claiming Refund Due a Deceased Taxpayer, with the return. However, if you are a surviving spouse filing a joint return, or a court appointed or certified personal representative filing an original return for the decedent, you do not have to file Form 1310.
Personal representatives must attach to the return a copy of the court certificate showing the appointment.
5. Not Providing Correct Social Security Numbers for All Dependents
Be sure that all dependents’ Social Security numbers (SSNs) and names match their Social Security identification cards. If the SSNs do not match, we will disallow the dependents and any related credits, but you will need to call the Social Security Administration at (800) 772-1213 to correct the mistake.
6.Failing to Sign Your Past Due Tax Return, this is a big one!!!
All returns must be signed. If filing jointly, both taxpayers must sign.
7. Mailing Your Past Due Tax Return to Incorrect Address
Be sure to mail your past due tax return to the IRS address on your notice. Sending your return to another address will delay the processing of your return.
8. Omitting Spouse’s Income on a Jointly Filed Past Due Return
Income from both taxpayers must be included on the return. If you need income information, please call the IRS’ toll-free number at (866) 681-4271.
9. Omitting the 10 Percent Early Distribution Tax on Qualified Retirement Plans
In general, any distribution from your IRA, other qualified retirement plan, or modified endowment contract before you reach age 59½ is an early distribution. In general, if you receive an early distribution (including an involuntary cash out) from an IRA, other qualified retirement plan, or modified endowment contract, the part of the distribution included in income generally is subject to an additional 10 percent tax.
10. Incorrectly Reporting Rollover Distributions
A rollover is a tax-free distribution of assets from one qualified retirement plan that is reinvested in another plan or the same plan.
Generally, you must complete the rollover within 60 days of receiving the distribution. Any taxable amount not rolled over must be included in income and may be subject to the additional tax on early withdrawals.
Delinquent, Filing Late Tax Returns – Back Tax Return Tax Help
