Most Americans face an annual obligation to file their tax returns with the IRS. These returns are designed to help the IRS determine the filer’s tax obligations after taking into account their income, losses, and investments in the previous year. Discrepancies in these filings can result in investigations by the IRS, making it vital to file them in a timely manner.
The reality is that many taxpayers file their returns late—or not at all. There are consequences that can come with unfiled tax returns, but the good news is that a dedicated tax lawyer could help. It is in your best interest to discuss your options with a Vienna unfiled tax returns lawyer.
There are multiple reasons why a taxpayer might not file their return with the IRS. Some of these reasons are intentional, while others are based purely on accident. Regardless of the reason, an unfiled tax returns lawyer in Vienna could help someone come into compliance and navigate any potential penalties or investigations.
Despite the annual requirement of tax filings, many people simply forget to file their returns on time. Confusion with the process can play a part. Not every person is required to file a return (people making under $12,500, for example, do not have to file) and some taxpayers might erroneously believe they fall into that category. Bad legal advice or family emergencies could also have an effect on their ability to file on time. More often than not, taxpayers do not file because they cannot afford to pay the tax. It is always important to file even if you cannot pay to avoid failure to file penalties.
There are financial penalties that can result from the failure to file a return. These penalties are a possibility no matter the reason that a person has failed to file in a timely manner, and they are not limited to situations where the taxpayer owes the government money. It is possible to assess a penalty even when the taxpayer is eligible for a refund if a tax return was filed. The inability to file on time could put that refund at risk.
The primary penalties that come with an unfiled return are based on the amount of the tax debt. Each month, the IRS can assess a penalty of up to 5% of the debt. The maximum accumulated penalty allowed by law is 25%. In rare cases, there could be criminal penalties associated with an unfiled return as well, and a conviction for tax evasion could result in up to a five-year prison sentence. However, most people seeking the services of a Vienna unfiled tax returns attorney will not have this risk.
When it comes to resolving penalties associated with unfiled tax returns, an attorney could help in different ways, depending on the level of risk and the taxpayer’s ability to pay. The easiest way to address this issue is to ensure the taxpayer files their return as soon as possible. There are also steps an attorney could take to reduce or even eliminate these penalties. This is known as IRS penalty abatement. Abatement occurs when the IRS agrees to reduce or even waive penalties they have already handed down. A lawyer could determine if the taxpayer is eligible for a personalized payment plan and help identify potential badges of fraud that warrant caution when filing back taxes.
The failure to file a tax return on time is a serious matter but it is also typically one that can be addressed. Filing a return right away—even when it is late—can reduce the consequences that come with not filing. In some cases, it could be possible to reduce or eliminate the penalties associated with not filing a tax return. If you have multiple years left unfiled and/or your income exceeds $100,000, please contact a Vienna unfiled tax returns lawyer to learn more about how to address this issue with the IRS.