How Far Can The IRS Go Back For Unfiled Taxes?

Here we answer the questions of how far the IRS can go back for unfiled taxes. The answer is it depends on the case.

For most cases, it’s 6 years

Most of the time if you have unfiled taxes, the IRS wants you to file the previous six years to be considered in compliance. Most years prior to that would already have been filed for you by the IRS, which is called a Substitute For Return, or the IRS is not requiring them at all.

The IRS will require you to be “in compliance” with filing in order to get a payment plan, Currently Not Collectible Status, or an Offer In Compromise.

Payment plans can be arranged with the IRS. They offer several programs including installment agreements, offer in compromise settlements, and even offer currently not collectible statuses where the IRS agrees not to enforce collections of your tax debt if it would create financial hardship. In some cases, bankruptcy can eliminate what you owe on returns.

This article will also discuss:

Eight Tips for Filing Back Tax Returns

NOTE: FreshBooks Support team members are not certified income tax or accounting professionals and cannot provide advice in these areas, outside of supporting questions about FreshBooks. If you need income tax advice please contact an accountant in your area.

Eight Tips for Filing Back Tax Returns

Filing your back taxes with the IRS can be daunting. Here are nine tips to remember when filing back taxes.

1. Confirm That You’re Only Going Back Six Years

Call the IRS or a tax professional can use a dedicated hotline to confirm that you only have to go back six years back for unfiled taxes.

2. You Won’t Get Old Refunds

The IRS doesn’t pay out old refunds. You can only claim refunds for returns filed within three years of the due date of the return. Everything before that is lost and you cannot collect that return.

3. Transcripts Help

Preparing an accurate return that matches IRS records is so important while filing back taxes. Request your wage and income transcripts from the IRS and trace your income history. Without this information, the IRS can question the accuracy of your return. Request transcripts to verify the amounts you may have paid for any estimated tax payments that you can credit to your owed tax balance.

4. Beware of Penalties

You might face a lot of fees if you have not paid in years and those fees can add up. You can incur such penalties like failure to file and failure to pay.

5. Request Penalty Abatement

The IRS can be lenient and understand your financial difficulties. You can ask the IRS not to charge ou a failure to file or pay penalties on balance-due returns. You can either use the first abatement for the first year if you qualify, or you can consider filing a reasonable cause agreement for late filing and get some relief for paying back your fees.

6. The IRS May Have Filed a Return for You

Sometimes the IRS starts the process called a substitute for a return about three years after the due date on the return. When you file a return to replace the substitute of return, the IRS closely scrutinizes the replacement return and compares it to the information statements on file. The IRS might take more time than usual to process the replacement returns – in some cases, more than four months – because of the scrutiny of the replacement return.

7. Delinquent Returns May Need Special Processing

If you have a substitute for a return in your past or delinquent return notice, you will need to file the return with specific IRS units for special processing.

8. You Can Set up a Payment Agreement with the IRS

If you owe money to the IRS, you can set up payment agreements if you can’t pay back your returns right away. There is several types of payment plans, depending on what you need. If you don’t set up a payment plan with the IRS and you avoid paying the IRS, the IRS will send their collections department after you.

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