Saint Louis Unfiled Tax Returns: What You Need To Know
There are many reasons why an individual may neglect to file their tax returns resulting in unfiled tax returns — a change in marital status, a serious illness, lack of records, they owe more than they can pay, or just plain procrastination. In fact, each year, an estimated 10 million taxpayers fail to file their federal income tax returns.
Whatever reason you have for falling behind on past returns, it’s in your best interests legally and financially to get current. Don’t try to outrun the IRS. At some point, they will catch up to you. Unlike in years past, the IRS has developed sophisticated computer technology and software programs to target non-filers.
At Krus Tax Law, we help individuals and corporations in the St. Louis community and surrounding areas avoid the devastating consequences of unfiled tax returns. Our highly experienced tax attorneys will prepare and file your back taxes to get you into compliance with the IRS. No matter how long it’s been since you’ve filed taxes, the IRS will most likely only requests tax returns dating back six years. And even if you have not maintained financial records, our law firm has the means to obtain the appropriate documentation from the IRS.
To schedule a consultation, give us a call at (314) 276-4834 or fill out the form below
What are the Consequences of Unfiled Tax Returns?
If you have unfiled tax returns, the IRS can impose wide-ranging civil penalties and can even pursue criminal charges.
Failure to File Penalty
- This penalty is 5% per month on the tax balance owed up to a maximum of 25%
- The interest on unpaid balances is 4% annual interest on unpaid balances (interest is updated on a quarterly basis)
Failure to Pay Penalty
- This penalty is 0.5% of the total balance for each month that has passed since the balance was due.
- If you fail to file a federal tax return after 3 years and are due a refund from the IRS or state, you WILL NOT get your refund.
- 1 year of prison time for each unfiled tax return
- up to $25,000 in fines
Substitute for Returns
If you fail to file your tax return, the IRS or state tax agency will send you a notice stating that they plan on filing one for you. This is called a substitute for Returns or SFR. It is based on what they can uncover about your income from your W2s, 1099s, K-1s, etc.
When the IRS prepares an SFR, they are acting in the interests of the government. They will give you the fewest number of exemptions and don’t take into account any deductions you may be legally entitled to. As a result, you’ll most likely end up with a higher tax liability which in turn increases interest and penalties. The IRS can also start collection actions against you, which may result in placing liens or levies on property or bank accounts
To avoid or mitigate these penalties, it’s critical to be proactive and file your tax returns before the IRS contacts you. Some people hesitate to do this because they are afraid of what will happen when they get back into the system. The truth is the IRS encourages voluntary disclosure and compliance and coming forward greatly minimizes the chance of criminal prosecution. When you file on your own, you can select your correct filing status (married, head of household, qualified widow or widower) — and take advantage of relevant deductions and tax credits to which you are entitled.