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Consequences of NOT Filing Tax Returns. If you are a non-filer, you face several possible bad consequences:
• Penalties. If taxes are owed, a delay in filing may result in penalty and interest charges that could increase your tax bill by 25 percent or more.
• Lost Refund. In order to receive a refund, the return must be filed within 3 years of the due date. If you snooze, you lose…YOUR REFUND!
• Lost Earned Income Credit. Taxpayers who are entitled to the Earned Income Tax Credit must file a return to claim the credit even if they are not otherwise required to file. The return must be filed within 3 years of the due date in order to receive the credit.
• Lost Social Security Benefits. If you are self-employed, you must file returns reporting self-employment income within three years of the due date in order to receive Social Security credits toward your retirement.
• JAIL!!! Willful failure to file a tax return is a CRIME. Non-filers of tax returns need to act quickly to avoid criminal prosecution for failure to file a tax return. If you have delinquent tax returns, don't wait another minute; delay could cost you your freedom. Even if you believe that you have paid all the taxes you owe through withholding, or by your employer, the willful failure to file a return is a criminal offense. The best way to avoid criminal prosecution relating to late tax returns is to remedy the situation voluntarily and submit all unfiled tax returns. The IRS is far less likely to pursue a criminal prosecution if you take the first steps in resolving the issue and get all delinquent tax returns filed.
Prosecution Statistics for Non-Filer Cases:
In FY 2006 the IRS obtained:
• Indictments in over half of the non-filer cases it criminally investigated!
• Convictions in approximately 88% of the cases that were indicted!
• Jail time in 80% of the cases convicted!
• Average jail sentences were 40 months long!
File All Tax Returns
You should file all tax returns that are due, regardless of whether or not full payment can be made with the return. Depending on your circumstances, nonfilers with late tax returns may qualify for a payment plan.
In short, delay does not help your situation. If you are a non-filer with delinquent tax returns, you need to file those late returns as quickly as possible.
Documents Required to Prepare a Return
In order to assist with preparing a tax return, taxpayers should bring any and all information related to income and deductions for the tax years for which a return is required to be filed. Some of the documents may include:
• Forms W-2 – Forms from employers showing wages for the year.
• Forms 1099 – Forms from banks and other financial institutions showing interest and dividends. Forms 1099 also report self-employment income.
• Information on expenses to claim on the return, such as itemized deductions, child care expenses, or employee business expenses.
• Social Security numbers for dependent children and any other person claimed as a dependent.
• A copy of the last tax return filed.
Can I File By Myself…or Do I Need a Lawyer?
There is no requirement that you hire a lawyer to file your late tax returns.
However, due to the fact that there is a possibility of criminal prosecution, you should STRONGLY consider hiring an attorney to help you file delinquent returns and protect your interests in the process.
Conclusion
Delinquent tax returns are a serious problem. Non-Filers should take immediate action to get late returns filed. Voluntary compliance can help reduce or eliminate exposure to penalties, interest, and possible criminal prosecution. Since willful failure to file a tax return is a crime, non filers should consider hiring an attorney to assist them with coming into compliance.
Tax Attorney David Jacquot, JD, LLM provides aggressive representation NATIONWIDE to businesses and individuals with tax problems or facing criminal tax investigations and trials. A description of his education and experience can be found at http://www.4taxhero.com . He can be reached toll-free at 866-4-TAXHERO (866-482-9437), locally at 208-415-0777 or via email at dave@4taxhero.com.
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