If you or your business haven't filed tax returns in a long time, either yourself and your fears of the consequences of not-filing are going to be your motivator to action or the IRS is going to be the catalyst. In recent years, the IRS has NOT been the driver that they once were due to budget cuts. To further illuminate the IRS's lack of action on non-filers, the agency which monitors the IRS, TIGTA, has released a report recommending that the IRS transfer resources to pursue "high income" non-filers. In the report, it appears the IRS had neglected non-filers for the 2012 tax year due to a coding error. They had fixed this coding error for 2013 - but at that time they didn't have adequate staff or resources to pursue the non-filers. TIGTA has highlighted this neglect in their report and is recommending that the IRS push resources into pursuing non-filers of 2014.
What does this mean for you, the non-filer? Well you might want to have us research your IRS record quickly to determine what would be the proper compliance for you.
Offer in Compromise? If you haven't filed six or more years, the big question is will you owe taxes or not? If you qualify for an Offer in Compromise (OIC) - you have every reason to file all of the tax years and make a settlement on the taxes.
File the Minimum - Pay What you Owe? On the other hand - if you are too "rich" for an OIC, you might want to file the two or three most recent years and pay what you owe plus some penalties and interest just to close the door to further IRS scrutiny.
Our research and analysis of your tax compliance will help clear up what is the best route for you.
In normal years, the IRS clearly would be your motivator - they would file your tax returns for you if you didn't file, assessing the tax debt, and then collecting the unpaid taxes from you. But in the last six years, the IRS has been a much leaner institution and not acting as they normally do as Congress has reduced their resources. The reduction in their budget was a political payback by Congress for the IRS scrutiny of non-profit conservative groups. As the elections approach, what can we expect from the IRS and Congress? Well, clearly a Democratic Congress will try to fund the IRS back to normal levels. If you haven't filed tax returns in a quite a while - you might also benefit reading our index of articles for "Non-Filers".