What Can the IRS Do if I Haven’t Filed My Tax Returns in Years?

On: March 22, 2019

The IRS can file your tax returns for you based on income reported by third parties (jobs, contracts, banks, credit cards, etc…), assess liabilities against you, allow interest and penalties to be imposed and grow and collect then against these liabilities as though you had filed the returns and not paid your tax due. A return prepared by the IRS under this process is called a Substitute For Return (“SFR”). While the IRS can see income issued you, it cannot see your legitimate business and personal expenses, so they file your returns with few to no expenses or deductions. This is how people who do not file their tax returns get in trouble with the IRS. We come across this problem almost every day. The solution is simple. Call the IRS. Order in the wage and income data and have the IRS mail or fax it to. You can also order it online (see irs.gov). You can file your tax returns at any time and they will replace the ones the IRS filed for you. If, according to the returns you are filing, you are due a refund for returns that you are filing that are over three years from the date they were supposed to be filed, you will lose that refund. The IRS normally does not go back more than 6 years to do the above. It can do so up to 10 years if it feels it is necessary. If you are a member of the “all cash economy”, it is likely you are invisible to the IRS. The IRS can only see what is reported to it. Be advised, however, that banks, mortgage lenders, credit cards and check cashing places do report to the IRS.