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Delinquent Tax Returns

      Steps in filing delinquent tax returns

      Individuals and organizations that have not filed several years of tax returns should not assume that years are subject to a monitored filing requirement. This is very different from the legal requirement to file a tax return. We have outlined a practical approach to determining what must be filed to bring your filing status current.

      Generally, the federal government will require tax returns from 1987 to the current year. Prior years may still be required because of some outstanding compliance action. Those outstanding actions include balance due years or special monitoring activity.

      The state government requirements vary from state to state. A check with the state of residence will indicate if any actions are necessary. Often a state tax lien will appear on a credit report. Many states are contracting out the collection efforts. State follow-up is strongest in your state of incorporation.

      Contacting the Internal Revenue Service

      When a taxpayer contacts the IRS for their own account , you can expect to be asked to answer some important and probing questions

        • What is your current address?
        • What are your home and work telephone numbers?
        • Where do you work?
        • Where do you bank?
        • If you owe money, are you prepared to pay the balance in full?

      After you have given this information. The IRS will seek to extablish a time by which you agree to be in compliance. Your failure to comply will result in wage or bank levies. Levies can not be made unless a tax has been assessed and notice of intent to levy has been issued. If the IRS has prepared returns for you or you have had examination adjustments, a balance due may exist. Notice of intent to levy may have been sent to an old address. The law requires the taxpayer to notify the IRS of any address changes. If you have moved often and have not filed for some time, a legal notice of assessment may have been issued. Those amounts are legal and are collectable.

      When you contact the IRS you will be required to give them your social security number and current address. You may use a change of address form 8822. If the IRS has a different address the correction will take place at the time of the call or the notice. At the time of contact you should determine if any balances are due. If there are balances, request an account summary so you can determine to what year the balances apply and what transactions took place. If you do not have copies of tax returns use form 4506 to request copies.

      If you find you have balances due, do not dispute them with the telephone representative. Wait until you receive the account summaries. If your balance is under $10,000 and no returns are due, request a payment plan. You should be prepared with the information on form 433-A. If you are self employed you will need to prepare form 433-B. You will need a year-to-date income statement for your business.

      Do not dispute the amounts the IRS says are due. Setting up an installment plan is not an agreement as to the amount due. The amounts due can be adjusted, by filing returns, amending returns (limited), or penalty forgiveness. The establishment of a payment plan will protect you from further collection action.

      A federal tax lien may have already been filed. If not already filed, the IRS will often file a tax lien as part of a long term payment plan, or when the balance is over $10,000. All tax liens will appear on your credit reports until released. These liens affect only your credit and real estate sales.

      Missing or government filed tax returns

      The IRS will not establish a formal payment plan until all tax returns have been filed. IRS may give you additional time to file the missing returns. IRS is not required to stop collection action while you are preparing missing returns. It is vital to follow-up on all dates established. If not collection action will begin immediately.

      When you determine that returns are due you can request income reports and copies of your W-2 forms. If you get W-2 information in report form or by phone, you will need to attach form 4852 substitute for W-2 to your tax return. The information may or may not have state withholding data on the record.

      If there are no balances due, your pace can be slower, and any pending refunds will be frozen. Late returns with balances due must be paid. Later returns with refunds filed more that three years late are not refundable. There are new rules for payments made with extensions.

      If the IRS representative agree to help you obtain missing information, get as much time as possible. There is often a long delay in getting forms and information. Additional time may have to be requested. The IRS telephone representatives have limits on the amount of time they can grant.

      If you need tax forms you can get them by calling 800 829-3676 or by downloading from the internet. Prior years are only available from IRS.  You can download FileTax Organizers in PDF format.

      Telephone Guidelines

      • Be courteous, don't raise your voice. The telephone representative is giving you information they have on their computer screen.
      • If the representative is unduly harsh or requires payments that you can not afford, politely ask to speak to a supervisor for a review of the actions taken.
      • If you really can not stand the attitude, hang up and call later, or the following day. There are some tough cookies at the IRS.
      • Verify all due dates at the end of the conversation and write them down. Put the dates in your calendar, the IRS did!
      • Three days before the due date call and request more time if needed.
      • Don't refuse to give the IRS representative information they request. They have a legal right to ask for information.
      • Get a motivational Poster for yourself.

This material is provided for general and educational purposes only, and is not intended to provide legal, tax or investment advice. Individuals who wish to invest in retirement plans should contact their tax and financial advisors regarding their specific legal or tax situation.


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