Here is what to do when you have 10 or more years of unfiled tax returns. Not all tax returns are always required. This is not legal advice, but a general rundown of how you handle the situation with the IRS and states. States vary in their handling of unfiled tax returns.
See our video explanation below, then keep reading for more information:
First what NOT to do on 10 or more years of unfiled tax returns
Do not go to a CPA/EA and just file all the unfiled tax years. You might be filing things that do not need to be filed. The IRS and state might have already come up with a lower balance for you. Most likely, unfiled returns less than 10 years old are not going to be expired yet, but some may be closed already.
What to do with Federal Tax Returns not filed for more than 10 years
First, you need to see what they have filed for you if anything. Then ask about “140 codes” on any unfiled years and ask if they’re still looking for it.
Sometimes the IRS skips old years or does a year for you with a lower balance and you are lucky. The best option is sometimes to file only what is required.
Order Wage and Income Information for each unfiled year that needs to be filed. You can also order an Account Transcript if there’s any payment you have made that were not withheld from an employer.
What to do with State Tax Returns not filed for more than 10 years
Often they go back many years, longer than the IRS. IRS and states will usually come up with much higher balances than you really would owe. CA will use professional licenses to just “come up” with a balance. CA and NY are the best at collecting on people that have left the state.
Example: They sent me a letter for $9,000 when I moved to Las Vegas, Nevada. I am licensed as a California attorney but was not living in CA at all. They assumed a debt based on the professional license.
The statute of limitations is higher in many states.
Examples: NY and CA are both 20 years and there are some things that can extend it just like the IRS
Get wage and income information from the state. Ask how much tax was withheld and paid to the state if for any reason it is not on the paperwork. Some states do not have this data and you can request a copy of your W2 from your old employer.
File what needs to be filed and proceed on resolving the debt. Some states, like California, will not even review an Offer In Compromise until all missing years are filed.
Easy way to deal with unfiled tax returns
Go to our Contact Page.
We order the information, check it all out, file what needs to be filed and proceed on the best resolution.
If we cannot help you we’ll tell you. No false promises for settlements. We only submit settlements that can be accepted.
This post does not constitute legal advice. Consult with a tax attorney!