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Unfiled Tax Returns
April 1st is a dreaded day for any taxpayer. Just half of all taxpayers manage to prepare their tax returns and file them with the IRS prior to the deadline. The rest usually follow with a couple of weeks delay. Weeks sometimes turn into months and even years. The agency estimates that 10% don’t file their tax returns at all, though the real figures are much higher. Of course, it’s a crime not to file your returns if you owe taxes to the government. Depending on the case, non-filers can pay interest on their due taxes, incur financial penalties proportional to the taxes owed and even serve jail time for severe tax evasion.
THE IRS DELAYS BUT DOES NOT FORGET
Nothing will happen if you don’t file your taxes on April 1st. Usually, the IRS will give taxpayers plenty of time to voluntarily submit their returns.
But just because you haven’t heard from them immediately, it doesn’t mean they have forgotten.
In fact, the IRS uses very sophisticated computer systems which collect and cross-reference information from various records and databases to find discrepancies between the income you receive and the tax returns you file.
The list includes, but is not limited to:
- W-2 forms
- 1099 income reports
- Employers records
- Credit report databases like Experian
- Records of banks, credit companies, mortgage providers
- Property and DMV registries
All of this happens automatically, in real time, for hundreds of millions of Americans. In this digital age, where information is increasingly being stored and processed by computers, your chances for outrunning the IRS forever are just theoretical.
Eventually, the system will recognize you’ve not filed your tax return and start sending you notices, asking you to comply. If you continue to ignore them, your case will be forwarded to an IRS employee which will take over.
If you fail to comply after numerous notices, letters, phone calls and even visits by the IRS, they can and will calculate tax for you. The agents will start with the information they have and guestimate everything else, usually missing numerous exemptions and deductions you would normally take into account. The result, more often than not, is a substantially higher tax figure in your name.
THE CONSEQUENCES OF NOT FILING YOUR TAX RETURNS
Criminal charges can only be brought up for tax returns in the past 6 years, meaning you will not go to jail. Either way, unless you owe millions to the IRS, the chances of them putting you behind bars in an already overcrowded prison system are slim.
However, taxpayers should know that there is no time limit (or mercy) for civil penalties. Due taxes are owed to the IRS forever. If the agency discovers you have not filed tax returns, they can slam you with a civil penalty in addition to the taxes you already owe, as well as interest up to date.
Depending on the case, penalties may be:
- Filing late tax returns – civil penalty up to 25% of owed taxes.
- Errors and discrepancies in tax returns – civil penalty up to 20% of owed taxes.
- Filing a false tax return – felony conviction with up to 3 years in prison and a fine up to $100,000.
- Criminal conviction of tax evasion and fraud – up to 5 years in prison and a fine up to $100,000.
- Intentional tax evasion and fraud – civil penalty of 75% of owed taxes.
- Failure to file your tax returns AT ALL – 1 year in prison and a fine of $25,000 for each year you didn’t file a tax return
- Lying to an IRS employee – up to 3 years in prison and a fine up to $100,000.
That’s a financial nightmare. Depending on the case, it may drain your savings, put you out of business and even turn your whole life upside down. Obviously, you want to avoid such a scenario whatever it takes.
The good news is the IRS doesn’t treat everybody the same way. While usually uncompromising with the taxes and interest being owed, proper handling of the encounter can dramatically reduce the financial penalties imposed by the IRS. The agents will differentiate between unintentional failure to file a tax return, an honest mistake – misrepresenting of facts, and a willful, knowledgeable, non-compliance with the law.
If you find yourself with a lot of unfiled tax returns with the IRS knocking on your door, we recommend you seek professional help.
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We Can Help You
Tax Law
Elder Law & Estate Planning
High Dollar Cases
High profile taxpayers, like sports stars and performers, are the IRS’ way of making an example. Every IRS branch has specially trained Revenue Officers who handle high dollar cases separately.
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Tax Audit Defense
Our tax services include audit defense, IRS appeals, unfiled tax returns, CID investigations, enforced collections – liens, levies and more.
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Payroll Tax Matters
When you run a business and employ workers, you are responsible for handling payroll taxes. You need to deduct your employees’ taxes from their salaries and pay them to the IRS in their name.
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Unfiled Tax Returns
April 1st is a dreaded day for any taxpayer. Just half of all taxpayers manage to prepare their tax returns and file them with the IRS prior to the deadline. The rest usually follow with a couple of weeks delay. Weeks sometimes turn into months and even years.
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IRS Tax Appeals
IRS' Office of Appeals will review your case and provide an independent judgment, often softening the decision of the IRS.
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Elder Law
Elder law is the area of legal practice that encompasses all activities related to planning for a senior’s elder years.
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Medicaid Planning
Medicaid planning – when done properly – allows seniors to preserve their life savings and qualify for Medicaid.
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Estate Planning
Proper estate planning is crucial in order to ensure your assets and most valuable property is protected and managed in the most cost-effective way.
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Probate Law
Probate is a court controlled mechanism where the court transfers assets from someone who died (decedent) to the decedent’s beneficiaries. The beneficiaries are those listed in the decedent’s Will. When the decedent dies with a Will we refer to this as the decedent dying testate.
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Trust Creation and Administration
Estate Planning: Trusts allow you to bypass expensive Probate procedures, maintain the integrity of your assets and secure better future for your heirs. Daily, Montfort & Toups create efficient Estate Planning solutions and Trusts are one of our best tools!
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WHAT OUR CLIENTS SAY
ABOUT OUR SERVICES
I’ve had the pleasure to work with Mr. Daily for over 20 years, and he has always found the time to counsel and explain the best course of action.
JG | Tax Law Assistance And Counsel
Mr. Daily helped me get out of a tax situation that could have forced the dissolution of my business and ruined my credit.
Anonymous | Representation And Defense In Front Of The IRS
Fred assisted us through a multi year audit with ease and professionalism. His guidance was excellent and it was obvious he knew exactly how to handle the IRS
Richard | Multiyear Tax Audit Defense
I’ve had the pleasure to work with Mr. Daily for over 20 years, and he has always found the time to counsel and explain the best course of action.
JG | Tax Law Assistance And Counsel
Mr. Daily helped me get out of a tax situation that could have forced the dissolution of my business and ruined my credit.
Anonymous | Representation And Defense In Front Of The IRS
Fred assisted us through a multi year audit with ease and professionalism. His guidance was excellent and it was obvious he knew exactly how to handle the IRS
Richard | Multiyear Tax Audit Defense