What Will the IRS Do If I Don't File My Returns

I am getting multiple calls a week now from taxpayers who have not filed back tax returns and they are worried about what the IRS will do. So what can they do? First, they want you to file your returns so they will send you notices as a reminder. But if after some time you don't file they have a couple of choices. The first is to file a Substitute for Return or they can summon you or your records.

A Substitute for Return

If the IRS has enough information about your income they can file a Substitute for Return (SFR) based on that information and send you a notice of the tax due. You can accept that SFR or you can file your actual return. In the case of stock sales or business income since the IRS does not have your cost basis or your expenses typically you will want to file your own return to get a lower amount of tax assessed. The third thing that happen is the taxpayer can not respond to the SFR. In that case it will go final and the tax on that return will never be dischargeable in a bankruptcy. In addition once the SFR is final the IRS can levy your accounts and file tax liens. 


The other option can be summons. The IRS can summons the taxpayer to appear with all their records at a set date and time. At that meeting the IRS will use your records to file a return for you. The IRS can also summons others like your bank(s) for your records so they can create a return. 

Basically what I have outlined here in a very simple way are a couple ways the IRS can proceed against you if you don't file a return or multiple returns. The IRS can get nasty but what they really want are the tax returns. Even if you get summons there are things to do so you don't have to appear based on the summons. But if you don't deal with it it can escalate to the Department of Justice who will order you to appear in Federal District Court with your records. The way you deal with it is get them what they want and I can help with that. 

As I have mentioned in other posts, often taxpayers don't file because they are afraid they are going to owe and won't be able to afford to pay what they owe. That anxiety can paralyze people but it does not relieve the anxiety. My experience has demonstrated that taxpayers often owe less in taxes than what they anticipated. 

What you need to do is file and the sooner the better for you financially and emotionally. In addition to the taxes you have penalties and interest that can add up. The other reason you need to file is for the ability to negotiate with the IRS to pay your tax debts. Typically something can be worked via an Offer in Compromise or an Installment Agreement, or other available avenues with the IRS. But no matter which resolution will work for you you need to first get in compliance by filing your tax returns. 

These can be stressful times for taxpayers and negotiating with the IRS can add to anxiety. For me it is what I do and I can help you to try to get a resolution with the IRS for your tax debts. So contact me today using my email address below to arrange a consultation via a phone, Zoom, or Skype call.

The CPA Superhero


Be careful when reading about tax law and its application, including my articles, because the wording and definitions are such a challenge and are influenced by writers perspective, specifically his own clients situations that he is mindful of and other situations the writer is not thinking of. The point is talk to your CPA about your situation and circumstances and don't rely on or make conclusions based on articles you read, including articles form irs.gov, because concepts and definitions are not very clear, and of course, they are subject to change. Now is the time to be having discussions about your situation and developing strategies for you and your business. Again, contact me using my information above to discuss your situation. I help business owners all over the U.S. and in foreign countries with their tax returns.

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