The majority of individuals and business are required to file a tax return every year. Unfortunately, not all of them do so. This can result in a single unfiled tax return or years of unfiled and unpaid taxes. An unfiled tax return can lead to additional assessed penalties or a one-year prison sentence.
A Washington DC unfiled tax returns lawyer might be able to help if you need to file back taxes. A seasoned tax attorney could determine if you have additional criminal exposure and craft a plan to properly file the return to the Internal Revenue Service (IRS) before further action is needed. If you earn less than $12,500 per year, most likely you do not need to file a tax return – and the IRS focuses most of its energy on those who have a higher-than-average income.
Financial Penalties for Unfiled Taxes
For many people, filing their taxes is beneficial since they will receive a tax refund that puts money back in their pocket. However, there are others, especially those who run a business or are self-employed, who might need to pay money to the federal government when they file their returns. As a result, many people end up delaying this process. Perhaps they are going through a difficult period of life and lack time, energy, or resources to file. Some might simply not have enough money to pay back.
It is best to timely file tax returns even when they owe money. This is because a late filing can result in significant penalties. After the Notice of Determination is sent, and the deadline to file and pay taxes expires, the IRS may prepare “Substitute for Returns” and attach several penalties to the account. The failure to file penalty is 5% for each month the tax return is late, up to a maximum of 25%.
A Washington DC unfiled tax returns attorney could help someone with three or more years of missed filings, and/or someone with a Schedule C or Schedule E on their tax return, to manage their finances so that they are no longer at risk for additional penalties.
The Importance of Legal Representation
The IRS may prepare “Substitute for Returns” based upon information received from the taxpayer’s employer and banks. In this situation, the IRS will impose civil penalties and interest. Willfully not filing a tax return could lead to a criminal prosecution as a misdemeanor with a one-year sentence in prison per tax year. Tax evasion is a felony punishable for up to five years in prison.
Taxpayers with unfiled returns, unreported income, or overstated deductions are in a sensitive or “eggshell” situation because those may be considered badges of fraud which could lead to a civil investigation or a criminal prosecution. In these cases, it is important for someone in Washington DC to have legal representation from a local unfiled tax returns lawyer. Attorney-client privilege prevents the government from compelling either the attorney or the client from disclosing confidential communications related to legal advice. Accountant-client privilege does not apply to criminal cases, nor does the privilege exist with independent tax return preparers. Thus, an accountant could be forced to testify about everything said by the taxpayer.
Reach Out to a Washington DC Unfiled Tax Returns Attorney Today
Not filing an income tax return or any other kind of tax return should not be taken lightly. Whether this action was because of a mistake or because you believed you would be unable to pay the amount in full, you could still fulfill your obligation in such a way that does not place a financial burden on you.
A Washington DC unfiled tax returns lawyer could arrange a fair repayment schedule (such as an installment agreement or offer in compromise) for those with a large tax amount (usually on incomes over $100,000) due after they file. Contact an attorney today to learn more about how to file back taxes, including requesting transcripts and potentially doing a quiet disclosure, if it makes sense to do so.
