Is There a Statute of Limitations on Unfiled Tax Returns? 

There is no statute of limitations when it comes to unfiled tax returns for years in which you owe tax. When the IRS owes you a refund, you have three years to file a return and claim the refund.  

When you file a late return seeking a refund, you will not be charged a penalty for late filing. However, if you owe taxes, late filing has consequences. The IRS imposes penalties and interest on the taxes you owe up until you pay.  

If you cannot pay the full amount you owe on the late taxes, there are few IRS options available to help you. For late filers, the IRS limits taxpayer relief programs that would otherwise reduce the amount you owe or allow you to pay it slowly over time.  

Putting off filing makes things worse. The IRS has a long memory. Your obligation to file and pay doesn’t go away.  

How Does the IRS Treat Late-Filed Returns? 

In the eyes of the IRS a late return for a year when you owe taxes is subject to: 

  1. Late-payment interest 
  2. Late payment penalties 

The IRS takes matters into its own hands. It decides how much tax you owe and files a return on your behalf called Automated Substitute for Return, or SFR. The agency notifies you of the SFR with a CP2566 Notice. You have 90 days to respond. A tax attorney can file an appeal from the CP2566 for you in the U.S. Tax Court, and deal with the IRS directly for you. 

What Happens if the IRS Figures My Tax and I Don’t Pay? 

If you don’t pay the tax due from your unfiled returns, the IRS will set about collecting the money it believes you owe for the amount of your unpaid taxes by pursuing your assets through:  

  1. Liens 
  2. Levies  
  3. Seizures  

With late returns, you’re ineligible for the IRS Offer in Compromise program. The IRS also bars you from installment payment plans. The IRS also will hold onto any refunds you’re owed until it receives your unfiled return.

How Can a Tax Lawyer Help Me? 

If you’ve received a Notice of Unfiled Tax Returns from the IRS, a tax attorney can work out a plan with the IRS to resolve your tax problems. Tax attorneys understand the tax rules and tax law. They are comfortable talking to IRS agents and negotiating tax problems. 

There may be grounds for persuading the IRS to waive the late-filing penalty based on undue hardship. Tax attorneys have experience in proving this. 

The IRS knows if you didn’t file. Penalties are piling up every day that you don’t act. Venar Ayar can communicate with the IRS about your unfiled taxes, and advocate for a solution that allows you to clear your tax record, so the stress and worry can cease.