Taxpayers who have not filed back tax returns are sometimes in a quandary of how many back years they should they file to satisfy the Internal Revenue Service.
The IRS has set up a policy statement dealing with the issue of back tax returns and how many will fulfill the requirements to satisfy the Internal Revenue Service.
The IRS Policy Statement 5-133 regarding the filing of multiple years of back tax returns.
All taxpayers failing to file tax returns due will be requested to prepare and file all such returns except in instances where there is an indication that the taxpayer’s failure to file the required return or returns was willful or if there is any other indication of fraud.
All delinquent returns submitted by a taxpayer, whether upon his/her own initiative or at the request of a Service representative, will be accepted by the Internal Revenue Service.
If indications of willfulness or fraud exist
If indications of willfulness or fraud exist, the special procedures for handling such returns must be followed.
Where it is determined by the IRS that required returns have not been filed, the extent to which compliance for prior years will be enforced will be determined by reference to factors ensuring compliance and evenhanded administration of staffing and other Service resources.
Some, not all of these factors to be taken into account include:
1. Prior history of noncompliance,
2. Existence of income from illegal sources,
3. Effect upon voluntary compliance, anticipated revenue, and
4. Collectibility, in relation to the time and effort required to determine tax due.
Consideration will also be given any special circumstances existing in the case of a particular taxpayer, class of taxpayer, or industry, or which may be peculiar to the class of tax involved.
Not more than six (6) years.
Normally, application of the above criteria will result in enforcement of delinquency procedures for not more than six (6) years.
Enforcement beyond such period will not be undertaken without prior managerial approval.
This is rare that a manager overturns this policy.
Also, if delinquency procedures are not to be enforced for the full six year period of delinquency, prior managerial approval must be secured.
IRS Collection Procedures
Being a former IRS revenue officer the IRS attempts to collect these back taxes from non-filers just the way they do any tax delinquent.
They do not go out of the way to punish or hurt the taxpayer because of the multiple years of non filing.
It should be known that IRS just wants to have the individual and taxpayers back in the system.
If you need help filing back taxes returns and working out a tax settlement call us today and speak directly to former IRS agents.
