The Internal Revenue Service can be severe in the penalties it levies against individuals who fail to file accurate tax returns or those who attempt to illegally lower or avoid their obligations. The agency is generally welcoming to those who have simply failed to submit filings in recent years. Of course, such filers can still face penalties and interest for delinquency, but they typically will not face audit fraud or tax evasion cases.
Texas residents preparing to file their income taxes after several years of non-filing may discover that the IRS has already filed returns on their behalf, basing these returns on forms it has already received, such as 1099s, W2s and 1098s. The tax agency does not complete these Substitute Filed Returns, frequently referred to as SFRs, as a free service to the taxpayers in question, however. SFRs are followed by tax bills, frequently showing liabilities that are significantly greater than would result from filings those taxpayers submitted independently. The IRS may legally enforce those obligations until the individual in question submits his or her own filing and not even personal bankruptcy can eliminate tax liability generated from an SFR.
Filing returns after years of inactivity can be more difficult, especially for individuals that are unsure of how the law affects them or self-employed filers who have kept less-than-perfect records of their earnings and professional expenditures. Many such filers find it helpful to consult with a tax professional or legal expert to assist them with this often-intimidating process.
An IRS Form 2848 will allow a filer to name a representative through a Power of Attorney, effectively allowing that representative to act on the filer’s behalf in all interactions with the IRS. This representative can request any confidential tax data, negotiate with the IRS and field all tax-related phone calls on his or her client’s behalf. The IRS even offers a special phone line exclusively to professional tax practioners, allowing them to more quickly obtain a client’s missing tax information.
Regardless of one’s status with the IRS, tax law can be complicated and affect one’s life in unexpected ways. If you have questions or concerns about the legal complexities of income taxes, estate taxes or the IRS in general, you should contact a qualified Texas tax attorney.
Fox Business, “How Nonfilers Can Re-enter the Tax System Safely” Bonnie Lee, Aug. 06, 2013