Do you have previous tax returns that you have not filed?  Perhaps this was due to procrastination or in a misguided attempt to avoid paying taxes?  To limit the penalties the IRS can assess, including criminal charges, it is of the utmost importance that you act quickly to remedy this situation.

Your first thought may be to call your go-to tax professional to help you file the late returns, but I can assure you, going with a tax attorney is the best solution here.  Hiring a tax attorney as opposed to your regular tax professional, comes with invaluable benefits that can mean the difference between jail time and walking free with a proverbial slap on the wrist.  Some of these benefits include: attorney-client privilege and specific tax law knowledge that goes beyond the scope of those other tax pros’ education or training.

Voluntary Compliance via the Voluntary Disclosure Program (VDP)

If you proactively address your unfiled tax returns with the IRS before a criminal investigation has begun, you may qualify for the agency’s Voluntary Disclosure Program (VDP).  This program allows you to submit unfiled returns and avoid criminal prosecution.  A tax attorney can work with the IRS on our behalf to make this request.  He or she can also determine if you qualify for voluntary compliance, and help you provide the missing information to the federal agency.

To qualify for the VDP, you must meet the following criteria:

• Voluntarily inform the IRS of your failure to file tax returns for one or more years
• Earn income from only legal sources
• Disclose the unfiled returns before the IRS informs you of a criminal investigation
• File correct tax returns and cooperate with the IRS in determining your tax liability
• Pay the full amount due on your tax returns or make a payment plan with the IRS

Enforced Compliance from the IRS

If the IRS starts to send you notices requesting the delinquent returns be filed, it is crucial to work with a tax attorney to determine the appropriate actions.  The IRS will typically send you notices over 26 weeks (6 months), informing you of the unfiled returns.  If the tax returns are not submitted during this time frame, then the agency has the option to use another method of forced compliance.  This can entail: preparing a Substitute for Return (SFR) on your behalf based on third-party documents and information (while claiming next to no expenses or deductions that you would normally be allotted); contacting you by phone; or assigning the case to a Revenue Officer to perform an investigation.  A tax attorney can negotiate with the IRS on your behalf and possibly persuade them from resorting to any of these measures.

A tax attorney can also help you determine what information to provide to the IRS. The biggest mistake I see taxpayers make all the time is that in an attempt to be cooperative and completely candid (and also oftentimes because they don’t know any better), they give the IRS way more information than is required. And oftentimes, there is a smoking gun in that information that they don’t even know exists, and it winds up incriminating them or harming their case in some way. This information can be anything. It usually exists in the form of a document. But it can also be an innocent off-handed comment that is later used against them. A skilled attorney will be extremely discerning about what you should show the agent, exactly what to say, and also, if the agent is asking questions or probing areas that are beyond the scope of their investigation. You wouldn’t want to use that smoking gun to shoot yourself in the foot. And an attorney is the best piece of armor you can and should utilize to protect yourself from that painful (possibly debilitating), inadvertent, self-inflicted wound.

Criminal Non-Filing of Taxes

If the IRS determines that you habitually fail to file tax returns, it may refer your case to its Criminal Investigation Division (CID) to decide if criminal charges are warranted.  If this occurs, it is essential to hire a criminal tax attorney as soon as possible.  An attorney can represent you against the IRS, build your defense against any potential charges, and advise you on what information to provide to the IRS and its investigators.

The Benefit of Attorney-Client Privilege

This is perhaps one of the most invaluable perks that comes with hiring an attorney vs. any other tax professional.

An attorney cannot be compelled or forced to disclose ANYTHING that you reveal to them…even if it is illegal activity that you disclose to your trusted counselor. In fact, if they were to do so, they would get disbarred. Hiring any other type of tax professional does not come with this legal right and rest assured, the IRS will take full advantage of that and interrogate them to the fullest extent (under oath) in order to get incriminating information on you.

This benefit of retaining an attorney to help you resolve this and any other tax issue you may have is worth its proverbial weight in gold. This alone can mean the difference between serving time behind bars and being able to resolve this issue and walk away a free man (or woman, or however you choose to identify).