From the Tax Law Offices of David W. Klasing – What are Common Tax Issues that Non-Filers Face?

 Unfortunately, some taxpayers may not fully appreciate the risks and potential penalties for failing to meet their tax return deadlines. You could be subject to expensive monetary fines or even be charged with a criminal offense.

The statute of limitations for collecting a federal income tax refund is three years after the original filing date (four years for California). If a taxpayer fails to file their income tax return within these three years, the IRS will prevent the taxpayer from doing the following:

• Collecting a refund check
• Applying for tax credits
• Overpaying on taxes

Non-filers cannot receive credits for Social Security retirement or disability benefits because their income was not reported to the Social Security Administration.

If you may need a personal loan or a loan for your business, you should be aware that the loan approval process could be affected by unpaid taxes.

The Internal Revenue Service may choose to file a substitute return on their behalf. California will issue a notice of proposed assessment. When preparing to file a substitute return, the IRS will often send the non-filer a “Notice of Deficiency.” It Is wise to hire legal representation to prevent the substitute return from becoming collectible by filing a tax court petition and to help you settle with appeals via a tax return that takes advantage of exemptions and deductions that will have been routinely denied with a substitute return.

The IRS could place a tax lien on a taxpayer’s property if they do not pay their tax debt. The IRS can also levy the property named in the lien. This could be devastating for a non-filer, especially if the IRS levies property that is needed to operate a business. The IRS will commonly sell a taxpayer’s seized assets via auction for pennies on the dollar.

If you are delinquent on filing an individual or business tax returns or a tax return for your business, you should contact a skilled California Tax Attorney as soon as possible. Call (800) 681-1295 or visit the contact us page of our website to schedule a reduced rate initial consultation.

Public Contact: Dave Klasing Esq. M.S.-Tax CPA, dave@taxesqcpa.net