The Reality of Post-Tax Season IRS Notices
The April 15th tax deadline has come and gone. For many, it’s a time to breathe a sigh of relief. But if you missed the deadline or have unfiled tax returns from previous years, this time of year can be incredibly stressful. Soon after the deadline, the IRS begins sending out notices to taxpayers who have failed to file their returns or pay their taxes.
If you have recently received an IRS notice regarding unfiled tax returns, ignoring it is the worst possible course of action. The IRS does not simply forget about unfiled returns. Instead, the situation will progressively worsen, leading to severe financial consequences. Here at Brightside Tax Relief, we understand how intimidating an IRS notice can be, but there are immediate steps you can take to protect yourself.
Understanding the IRS Notice for Unfiled Returns
The IRS sends out various types of notices regarding unfiled returns. The most common is the CP59 notice, which is sent when the IRS has no record of receiving your tax return. If you continue to ignore these notices, the IRS may escalate to a CP3219N (Notice of Deficiency) or even file a Substitute for Return (SFR) on your behalf.
What is a Substitute for Return (SFR)?
If you fail to file, the IRS will eventually file a tax return for you, known as an SFR. However, this is never in your best interest. The IRS calculates your tax liability based only on the income reported by your employers, banks, and other financial institutions (via W-2s and 1099s). They will not include any deductions, credits, or exemptions you might be entitled to, resulting in a much higher tax bill than you actually owe.
Immediate Steps to Take When You Receive a Notice
If you’ve received an IRS notice for unfiled returns, taking prompt and decisive action is essential to minimize penalties and prevent aggressive collection actions.
1. Do Not Ignore the Notice
The most crucial step is simply to acknowledge the notice. Tossing it in the trash will only accelerate the IRS’s collection processes, which can include wage garnishments, bank levies, and tax liens. Open the notice, read it carefully, and note any deadlines provided.
2. Gather Your Tax Documents
To file your delinquent returns, you will need all relevant tax documents for the years in question. This includes W-2s, 1099s, bank statements, and records of any deductible expenses. If you are missing documents, you can request a Wage and Income Transcript from the IRS, which will show all the income information reported to them for that year.
3. File the Missing Returns ASAP
The only way to resolve an unfiled return issue is to file the return. Even if you cannot afford to pay the tax you owe, you should still file as soon as possible. The penalty for failing to file (Failure to File Penalty) is significantly higher than the penalty for failing to pay (Failure to Pay Penalty). By filing your return, you stop the Failure to File penalty from continuing to accrue.
4. Explore Payment Options if You Owe
If filing your past-due returns results in a tax balance you cannot pay in full, don’t panic. The IRS offers several resolution options for taxpayers who cannot afford their tax debt:
- Installment Agreement: A payment plan that allows you to pay your debt over time in manageable monthly installments.
- Offer in Compromise (OIC): In some cases, you may qualify to settle your tax debt for less than the full amount owed if paying it in full would cause financial hardship.
- Currently Not Collectible (CNC) Status: If you cannot pay anything without experiencing significant financial hardship, the IRS may temporarily halt collection actions until your financial situation improves.
Why You Need Professional Help with Unfiled Returns
Dealing with unfiled tax returns and IRS notices can be complex and overwhelming. A single mistake can result in additional penalties or a rejected payment plan. Tax professionals have the experience to communicate directly with the IRS on your behalf, ensuring that your returns are filed correctly and that you negotiate the best possible resolution for your tax debt.
Professionals can also help determine if you qualify for penalty abatement, which could significantly reduce the amount you owe if you had reasonable cause for failing to file.
Take Control of Your Tax Situation Today
An IRS notice for unfiled returns is a serious matter, but it is not the end of the world. By taking proactive steps and seeking professional guidance, you can resolve your tax issues and move forward without the constant fear of IRS collections.
At Brightside Tax Relief, our experienced team specializes in helping taxpayers navigate the complexities of unfiled returns, IRS notices, and tax debt resolution. Don’t face the IRS alone.
Contact Brightside Tax Relief today to schedule a free consultation and take the first step towards resolving your unfiled tax returns. Call us at 914-214-9127 or visit brightsidetaxrelief.com.
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