The start of the new year does not necessarily mean that you begin with a clean slate financially. You have an ongoing obligation to file tax returns with the IRS. If you have missed filing for any prior years, you must catch up on the requirements by filing all past due returns. January is the best time of year to do this, as you seek to position yourself for the coming tax season.
If you need guidance on getting compliant or addressing IRS communications, immediately contact an experienced tax lawyer in New York. Thorgood Law Firm can help.
The January Tax Window Is a Critical One
Your tax return is due to the IRS on April 15 each year. If you owe the IRS money, you must file your return by that date and pay the balance to the agency. It is critical that you know your full tax picture by that point. At that time, if you have overpaid your taxes, you can apply to receive a refund of the money that you are owed. However, you may not be eligible for a refund if you have not filed all of your tax returns, even if you are owed money by the IRS. Getting current on all of your tax returns is key to being in a position to successfully file your 2025 tax return. If you have any outstanding issues with the IRS, you may have enough time to resolve them before filing your return, which is currently due.
You Want to Act Before the IRS Does
The IRS can take enforcement action against you at any time. Depending on the circumstances of your unfiled return, the agency can assess steep penalties and interest for a failure to pay. They may even seek criminal prosecution for a willful failure to file tax returns, which can lead to a potential jail sentence. If you are proactive in the situation, you may have more options available to you in resolving any tax situation.
If the IRS takes action before you do, your situation could become materially worse. The agency may be less willing to work with you, since you have not shown the willingness to come forward on your own to resolve tax issues. Beginning to handle your tax issues on your own may be taken as a sign of good faith by the IRS, and it could lead to a better outcome if you owe a substantial amount of money.
The IRS Can Act on Its Own
If you continue to have unfilled tax returns, the IRS still has access to reports on your income. At a certain point, the IRS may calculate your taxes in a Substitute for Return. Then, you may not be able to claim deductions that you otherwise would have taken when you filed your return on your own. Then, you may need to persuade the IRS of your deductions after they have already calculated the amount of taxes due, and the agency may not be as likely to listen. Acting now can allow you to still claim deductions before the IRS takes action.
The Penalties for Unfiled Returns Can Be Steep
The IRS assesses even more significant penalties when you have not filed a return in the first place. If you end up owing money as a result of your tax return, the IRS will increase the amount by 5% for each month that you did not file the return (up to a maximum of 25%). There is a minimum penalty that is applied if your return is more than 60 days late. In addition, the IRS will also include a .5% penalty on the unpaid balance of your taxes for each month that it is not paid. Additionally, the IRS also applies the statutory interest rate to unpaid taxes, which further increases the balance.
How to Get Compliant on Your Unfiled Returns
You can begin to get compliant with tax laws by filing the returns that are past due. If you are owed money, you can still claim your tax refund. If the returns show that you owe the IRS money, you will need to pay both the amount of back taxes, along with interest and penalties. You must do this for all of the years that you have not yet failed to file tax returns.
If you are dealing with a large tax debt or have multiple years of unfiled returns, you are better off not trying to handle things on your own. An experienced New York tax attorney can help you compile your tax returns and deal with any issues arising from them.
Your Options When You Owe Back Taxes to the IRS
Once you have filed all of your returns, you are in a better position to potentially negotiate with the IRS. If you still owe the agency money after you have filed all of your tax returns, you have options available to you. You can agree to an installment plan with the IRS, giving you more time to pay what you owe (although you must still pay interest and penalties on any back taxes). An installment plan can at least relieve some of the immediate pressure of owing back taxes. You can also propose an Offer in Compromise to the IRS, in which you may be able to pay less than the amount that you owe in taxes. Finally, if you meet the criteria, you can seek a penalty abatement, which can reduce some of the balance that you owe the IRS.
Contact a New York Tax Lawyer
If you have fallen behind on filing tax returns, the problem will not fix itself. Waiting can make penalties and interest far worse. A New York tax attorney at the Thorgood Law Firm can help you catch up on late returns, reduce penalties, and bring you back into compliance with the IRS or New York tax authorities. We guide you through the process step by step, protect your rights, and work to minimize your financial exposure. Contact the Thorgood Law Firm today either online or by calling us at 212-490-0704 to take control of your tax situation.
