The U.S. government collects taxes from most individuals and businesses. You are only exempt from paying federal taxes if you earn below a certain threshold (about $12,500), have enough deductions to offset them, or are claimed as a legitimate dependent by another person who files. A failure to file your tax return by the April 15 deadline could result in penalties.
A trustworthy tax lawyer could explain the options you have for coming into compliance and paying what you still owe. When you have an income above $100,000 and have not filed taxes in at least three years, our Alexandria unfiled tax returns lawyer is your best resource for mitigating IRS penalties and liens.
The IRS accepts certain reasons for not filing income tax returns and does not automatically assume tax evasion. At some point the IRS may send a letter about the missing tax return to demand its immediate filing or explanation of why it is late, you do not have a filing requirement, or that you already filed it. Some valid reasons why individuals or businesses do not file returns on time include:
Taxpayers who provide these reasons to the IRS are not absolved from ever filing. Rather, the taxpayer must still file and pay their taxes while penalties and interest continue to accrue. An Alexandria unfiled tax returns attorney can assist taxpayers in filing delinquent tax returns and resolving the underlying tax debt.
The IRS imposes a Failure to File Penalty on taxpayers who do not submit their returns. This penalty is 5% of the delinquent taxes each month, although the penalty will not exceed 25% of the taxes due.
If the IRS imposes a Failure to File penalty for taxes that were not paid on time. The penalty is 0.5% of the tax owed each month, with a cap of 25%.
If you do not file your tax return, the IRS may prepare one for you called a Substitute for Return based upon income information provided by your employer, bank, etc. The SFR most likely will not give you credit for exemptions or deductions. The IRS will then send you a Notice of Deficiency proposing this tax assessment. Then you will have 90 days to file the back tax return or file a petition in U.S. Tax Court. If you do not file the back tax return or petition U.S. Tax Court, the IRS will enforce collection actions, such a levy on a bank account, a lien on a property, or other hardships until the tax is paid. There will also be penalties and interest on the owed amount that will accrue daily.
A lawyer’s first objective is to determine what years the taxpayer needs to file for. The IRS Policy statement 5-133 states that the unfiled tax returns lookback period is six years, so any missed tax returns prior to that may not need to be addressed. There might also be a year where the taxpayer did not earn above the income threshold to file. If they are missing information from a specific year, an Alexandria lawyer could contact the IRS to secure the necessary information from the unfiled tax returns.
If the taxpayer does not have the money to pay in full, and the debt owed exceeds $50,000, a lawyer can help set up a payment plan, such as a monthly Installment Agreement or an Offer in Compromise.
A lawyer can also assess whether the taxpayer has any criminal exposure for unfiled tax returns – which is rarely the case but should be taken seriously. For a taxpayer that has willfully failed to file tax returns, submitting a Voluntary Disclosure could resolve their non-compliance and limit exposure to criminal prosecution.
Between penalties, interest, and collection efforts like liens and levies, the IRS has numerous tools to pressure taxpayers into filing and paying what they owe.
The Pontius Tax Law team can help you get your documents in order and show the government you plan on fulfilling your obligation. Contact an Alexandria unfiled tax return lawyer if you have more than $50,000 in unfiled taxes or have numerous complex returns to address.
Pontius Tax Law, PLLC is a tax law firm that strives to resolve sensitive tax problems through trust, dedication and value. The law firm was founded by John Pontius with offices in Washington, DC, Rockville, MD, Bethesda, MD, Fairfax, VA, and Alexandria, VA. Mr. Pontius represents individual and business clients with sensitive and serious tax matters before the Internal Revenue Service and state taxing authorities. His client base is local, national, and international.
Over the course of his career, Mr. Pontius has represented businesses and individuals with complex tax issues in the following areas: FBAR examinations, offshore and domestic disclosures, FATCA, FIRPTA, tax planning, unfiled tax returns, release of tax liens and levies, trust fund recovery penalty, IRS and state audit examinations, as well as appeals, penalty abatement, U.S. Tax Court litigation, along with defense of tax fraud and evasion. If you require assistance from a tax lawyer, contact Mr. Pontius to discuss your situation.