3 Steps to Take for Individuals with Unfiled Tax Returns

Filing tax returns is a legal obligation for anyone and everyone earning an income above a certain amount in the United States.

But life can sometimes throw you curveballs, and filing taxes ends up being on the bottom of your to do list. Out of sight, out of mind, right?

Unfortunately, the IRS does not turn a cheek, and the potential ramifications for not filing your taxes can result in major consequences like penalties, interest charges, and even potential legal problems. The tax professionals at Advantage Tax Relief Inc. in Itasca, IL have seen it all. If you have unfiled taxes and need help, contact our office today at 630-773-3200 for a free, no-obligation consultation.

For anyone with unfiled tax returns, pay close attention to all of the steps listed in this article.

Understanding Unfiled Tax Returns

Unfiled tax returns refer to the tax forms that individuals are required to submit to the IRS, but have not filed for one or more tax years.

Regardless of the reason, it’s important to not let too much time lapse. It’s always best to address your unfiled tax returns as soon as possible to avoid escalating any potential penalties and legal consequences.

Potential Penalties for Non-Filing

The IRS may impose some significant penalties and consequences for not filing your tax returns. Here are some of the more common penalties that they issue:

Failure-to-File Penalty: This penalty accrues at a rate of 5% of the unpaid taxes per month, up to a maximum of 25% of the unpaid tax amount. It will apply to the net amount that is due after accounting for any payments and credits.
Failure-to-Pay Penalty: If taxes are owed but not paid by the filing deadline, a failure-to-pay penalty gets applied. This penalty accrues at 0.5% of the unpaid tax amount per month, also capped at 25%.
Interest Charges: In addition to penalties, interest accrues on the unpaid tax balance. The interest rate is determined quarterly and compounded daily, reflecting the cost of borrowing as set by the IRS.
Legal Action: Continuously complying with filing requirements may result in legal action, including IRS collection efforts, levies on wages and bank accounts. In addition, you could also be facing a $10,000 fine, and a year in prison, for every unfiled income tax return, as it’s considered a misdemeanor in the U.S. for not filing a legally due tax return.

Steps to Take for Filing Overdue Tax Returns

While this information may seem alarming or overwhelming, don’t allow it to paralyze you from moving forward. It is crucial to take action.

You want to take care of your unfiled tax returns as soon as possible because the amount you will owe will just continue to grow.

Start taking action with these steps:

Step 1: Gather Necessary Information

Income Documents: Collect all W-2s, 1099s, and any other income statements for each tax year.
Expense Records: Gather any and all receipts and documentation for deductions, credits, and expenses claimed.
Previous Tax Returns: Obtain copies of previously filed tax returns, if available.

Step 2: Prepare and Submit Delinquent Tax Returns

Download Forms: Access the necessary IRS forms for each tax year requiring filing.
Complete Forms: Fill out the appropriate tax forms accurately, reflecting income, deductions, and credits for each year.
Submit Returns: Mail completed tax returns to the IRS for each applicable tax year. Consider sending them via certified mail to track delivery.

Step 3: Address Tax Payment Options

Payment Plans: If taxes are owed but cannot be paid in full, consider applying for a payment plan (installment agreement) with the IRS.
Offers in Compromise: In cases of significant financial hardship, explore the option of settling tax debts for less than the full amount owed through an Offer in Compromise.
Penalty Abatement: Request abatement of penalties if reasonable cause can be demonstrated for the failure to file or pay taxes.

How Tax Relief Professionals Can Help

Don’t think that this has to be done all on your own! Tax relief professionals like the ones at Advantage Tax Relief Inc. in Itasca, IL are a tremendous resource and may even help reduce the total amount owed.

Their expertise goes a long way. Here are just a few of the things that tax relief professionals can assist with:

Compliance Guidance: Ensure accurate completion and timely submission of delinquent tax returns.
Negotiation Skills: Negotiate with the IRS on behalf of the taxpayer to secure favorable payment terms or settlement agreements.
Penalty Relief: Advocate for penalty abatement based on reasonable cause or first-time abatement criteria.
Financial Analysis: Conduct a financial analysis to determine the most suitable tax resolution strategy, such as installment agreements or Offers in Compromise.

Addressing unfiled tax returns is vital for anyone seeking to regain compliance with IRS requirements.

Luckily, resources are available to you. Tax relief professionals play a crucial role in facilitating compliance, minimizing penalties, and securing favorable tax resolutions.

Contact the tax relief professionals at Advantage Tax Relief Inc. with locations in Itasca, Naperville, and O’Hare Regent, IL. Call today at (630) 773-3200 to discuss your options.

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Understanding the LT11 Letter: Take Immediate Action

By 7066766659 • December 30, 2024

Receiving an LT11 letter from the IRS can be incredibly unsettling. This notice is a serious warning that the IRS is prepared to take tough action to collect unpaid taxes. If you’ve received this letter, it’s important to understand what it means and why you need to act quickly. What is an LT11 Letter? An LT11 letter, also known as the "Final Notice of Intent to Levy and Notice of Your Right to a Hearing," is sent by the IRS when you have unpaid taxes and haven’t responded to previous notices. This letter means the IRS is ready to levy your assets, which means they can legally take your property to pay off the tax debt. This could include money in your bank accounts, your wages, your home, or other valuable belongings. What Can Happen If You Ignore It? If you ignore an LT11 letter, the IRS can take serious actions, such as: Seizing Money from Your Bank Account: The IRS can freeze your bank accounts and take the money. Garnishing Your Wages: Your employer will have to send a portion of your paycheck to the IRS. Taking Your Property: The IRS can seize your house, car, or other valuable items. Damaging Your Credit Score: A levy or lien can hurt your credit score, making it hard to get loans or credit in the future. Why You Need to Act Quickly The LT11 letter gives you only 30 days to respond. Within this time, you have the right to request a Collection Due Process (CDP) hearing. This hearing is your chance to dispute the levy action, propose a different payment plan, or challenge the amount you owe. If you don’t act within these 30 days, the IRS will start the levy process, and your options will be very limited. The Importance of Professional Help Dealing with the IRS and resolving tax problems can be very complex, and trying to handle it on your own can lead to mistakes that might make your situation worse. A tax resolution professional has the knowledge and experience to help you navigate this challenging process. Benefits of Professional Help: Expert Negotiation: A professional can negotiate with the IRS on your behalf to secure the best possible terms. Strategic Planning: They can develop a plan to resolve your tax issues without causing financial hardship. Legal Protection: A professional ensures that your rights are protected throughout the process. If you’ve received an LT11 letter, don’t wait another moment. Contact Advantage Tax Relief immediately at 630-773-3200. Advantage Tax Relief is a skilled tax resolution firm that can help you navigate your tax issues and achieve the best possible outcome. Call Advantage Tax Relief NOW at 630-773-3200 to prevent the IRS from taking your hard-earned money and assets.

What to Do If You Have an IRS Balance: Solutions from Advantage Tax Relief

December 9, 2024

Dealing with an IRS Balance? Reach out to Advantage Tax Relief today to solve all of your IRS problems! Receive expert guidance and support from a professional expert.

How to Handle a CP523 Notice from the IRS

November 25, 2024

What is a CP523 Notice from the IRS? Receiving a CP523 notice is a serious matter. It’s an official communication from the IRS informing you that your tax installment agreement has been canceled. This typically happens when you fail to make payments or violate the terms of your repayment plan. If you’ve gotten this notice, it means the IRS is prepared to take further action, so it’s critical to understand what it means for your situation. Why You Need to Act Now A CP523 notice signals that your repayment agreement is no longer in effect. Without an active installment plan, the IRS has the authority to initiate collection actions against you, including: Wage Garnishments: The IRS can garnish your wages without additional warning. Bank Levies: They may seize funds directly from your bank account. Liens on Property: The IRS could place liens on your property, affecting your ability to sell or refinance. Ignoring the CP523 notice can lead to significant financial consequences, such as: Immediate Tax Payment Demand: You could be required to pay your entire outstanding balance in full, which can be overwhelming. Escalating Collection Efforts: The IRS can move quickly to enforce collection actions if you don’t address the notice in a timely manner. Damage to Your Credit: Unresolved tax issues can severely impact your credit, making it difficult to secure loans, credit, or even housing. Steps to Take if You Receive a CP523 Notice While receiving a CP523 notice can feel intimidating, there are clear actions you can take to prevent further issues: 1. Respond Promptly: Time is critical. The sooner you take action, the better your chances of avoiding severe consequences. 2. Review the Notice Carefully: Understand the reason your installment agreement was canceled, the amount you owe, and any deadlines for taking action. 3. Evaluate Your Financial Situation: Take stock of your finances and explore your options for resolving your debt. This might include reinstating your installment agreement, negotiating new terms, or looking into other tax relief solutions. 4. Contact the IRS: Reach out to the IRS as soon as possible to discuss your situation and find out what steps you need to take to get back on track. 5. Consider Professional Help: Navigating the IRS system can be complex, but you don’t have to do it alone. A tax professional like John Bruszewski at Advantage Tax Relief can help you negotiate with the IRS, review your options, and work toward a favorable outcome. Don’t Wait – Get Help Now Ignoring a CP523 notice can make matters worse. It's essential to act quickly and seek guidance from a trusted expert. John Bruszewski at Advantage Tax Relief is here to help you understand your options, negotiate on your behalf, and guide you through the process. Call for a Free Consultation Don’t wait until it’s too late. Call Advantage Tax Relief today at 630-773-3200 for a risk-free consultation and get the help you need to resolve your tax issues and protect your financial future.