What should you do if you haven't filed a tax return in 10 years?

Question

Someone I know (yes, it really is someone else) has had tax withheld from his paycheck for the last ten years, but hasn't filed a return for any of those years. Any advice on what he should do? I told him to go to the IRS and file - but now I'm wondering if I gave him good advice. Should a criminal lawyer handle this?

This guy is looking to clean up his act. He hasn't made much money, and probably wouldn't have owed anything if he had just filed the returns when they were due.

NG - Thanks for the detailed response. You make a lot of sense. I agree that proph is out to lunch.

Gary - Couldn't agree more. "Not too bright." Fortunately, I think we're going to find that most of the taxes (if not all) were paid. Hopefully, he'll be able to clean up this mess without a lot of turmoil. Thanks!

Answer 1

The IRS isn't really as bad as some people believe. Yes, the IRS can be stubborn when a person owes them money, but it is possible to work with them.

The absolute first thing your friend should do is to get all of the documents required for filing his returns. He should get all of his W-2s or 1099s or any other documentation of wages. He will also need to have documents concerning any life changes that occurred during the time period (marriage, divorce, birth of a child, etc.). He will need to get all of the applicable forms for filing from the IRS website. He can get previous year's forms at http://www.irs.gov/formspubs/article/0,,id=98339,00.html

I recommend that he fill out each year's forms in order. If he finds that he was to receive a refund, he won't be able to collect on any refunds before the 2003 taxable year. He has lost all rights to those. He should file them anyway just to make everything complete. If he finds that he was supposed to pay some years, he should get prepared to send in a check for the amount shown on the returns. Any interest and penalties due will be assessed by the IRS and they will send him a notice of the amounts. I recommend that he start saving as much as he can now, so he'll be able to pay any penalties when the IRS makes it's assessment.

Good luck,

Edit: TITLE 26, Subtitle F, CHAPTER 61, Subchapter A, PART II, Subpart B, § 6012 states in part "Returns with respect to income taxes under subtitle A shall be made by the following:
(1)
(A) Every individual having for the taxable year gross income which equals or exceeds the exemption amount".

There ya go pr0ph, anyone who has income over the exemption amount must file a return. Of course, I already know you're a tax protestor. You won't believe it is a law even if you get sent to jail for it just like Irwin Schiff.

Edit #2: See pr0ph, I knew you were dense. I pointed you to the law before you had even gotten a single thumbs down and yet you still claim "four thumbs down so far and NO ONE has shown me a LAW." The law covering income taxes is Title 26 of the U.S. Code whether you like it or not.

Go ahead and don't pay taxes. Either you are too small of a tax payer for the government to deal with or they just haven't gotten around to you yet. I hope they do though. Maybe you'll get sent to jail just in time to meet your hero, Irwin Schiff.

Answer 2

Two issues. 1. Is the filing requirement. For a single adult who is NOT claimed as a dependent, they can make $10750 in 2010 before having a filing requirement. SSA retirement benefits are not considered. If he's married, but would file MFS, the requirement drops to $3650 for 2010. If he's a dependent, the requirement drops to $2350. 2. The letter from the IRS. The old letter simply outlined the above. The new letter is saying that the IRS has received information on a 1099 or 1098 that implies his income is higher than the cutoff. Common ones: Selling stocks and bonds, even at a loss, where the proceeds are more than the above threshhold. If so, he *does* have a filing requirement. Paying mortgage interest (reported on 1098) that is so much the IRS wonders where he got the money. If so, he can respond on the form that he is using savings. Have him send you a copy of the letter. He may need to call the IRS to ask more questions.

Answer 3

It is written IRS policy that it will only solicit six years worth of delinquent returns unless there is fraud. If the person you are writing about has wages subject to withholding and has not had contact from the IRS, the chances are that he or she owes very little, if anything, and may even be due a refund. Returns for 2000 through 2006 should be prepared (by self or a professional) and mailed to IRS in separate envelopes. If there are some balance due returns they should be mailed first. If any returns for 2004 or later have refunds, mail them a few weeks later. This way the refunds will be applied to the balances due as of the date the returns were due thus saving on interest. If returns for 2003 or earlier show refunds, kiss them goodbye because the statute of limitations for claiming a refund has expired.

Answer 4

If this person owes money he may have a problem with the IRS and should contact a lawyer. If this person doesn't owe money but still had tax withheld he might get back maybe 3 years worth. What planet is this person come from? Not to bright.

Answer 5

Since recently I started visiting Yahoo answers. I find this a shocking truth that a large number of population is unaware of many basic facts about tax filing. It appears that the "someone" did not file due to ignorance and he/she never had proper guidance. For me the taxpayer is only partially responsible for faulting in filing returns even if some taxes were due; he/she has not become a criminal.

I feel that in the High Schools, there must be a course on filing and taxation. Each and every student must be taught about filling the basic tax forms. Tax forms should be available in each and every school and the schools must inform the students when the due dates are approaching. It will improve compliance.

Answer 6

For the years that are least recent:
The statute of limitations already expired, so there is no need to do anything.
For the years that are most recent:
If he would not have owed, he should file now, and he might get a refund.
For the years in between:
He should file now; otherwise, there is still for the IRS to decide he owes money. However, it is too late to get a refund.

I am not sure of the exact numbers of years that are the cutoffs. I think ~6 years and ~3 years. Check www.irs.gov.

Answer 7

It is possible that he did not make enough to actually need to file a return. It is very possible that he has missed out on refunds for all those years. In any event, he should probably contact the IRS, just to ease his conscience. At worst, he will have back taxes and penalties to pay. That is, of course if he owed anything other than what was witheld.

Answer 8

Dude, this guy is in some nasty trouble. The IRS doesn't like that. They will charge him interest on the money owed from all the past years. ARGH!! I missed for two years once and got slammed! But it is a good thing that he is willing to do that. I only hope it goes well for him.

Answer 9

10 years may be too long. He should go to a professional tax service and literally have them figure his taxes for the last ten years and back-file. It's the only alternative to going to jail. I had a check come in that was owed to me three years before (disability) and my old tax returns either had to be amended, or I could pay all the tax on that three years' worth of money at one time. The H&R Block tax assessor figured it was cheaper for me to spread it out over three years. So, if you can pay back taxes for a three year period, I would think you could for 10 years. Your friend will likely be audited, which is another reason to go someplace like H&R Block. They have to represent you at any audit for which they did the numbers. If the H&R Block assessor or other pro tax assessor won't touch it, then go get a criminal attorney. Either that, or your friend will have to live in exile in a country with no extradiction with the US.

Answer 10

if he didn't make a lot of money then he was probably owed a refund and not required to file. you are only required to file if you made money and owe them. they do not mind if you give them your refund and don't claim it . lol.

i would consult an accountant/tax person and figure out how to proceed. get the facts and then figure out how you should handle. you might want to get a couple of opinions.

good luck.