If the Customer Can’t Pay The Taxes V
Filing Past Due Returns
The IRS requires that you file all tax returns that are due, regardless of whether or not you can pay in full. File a past due return the same way and to the same location where you would file an on-time return.
If you have received a notice, make sure to send your past due return to the location indicated on the notice you received.
Why you should file your past due return now:
- Avoid interest and penalties - File your past due return and pay now to limit interest charges and late payment penalties.
- Claim a refund - You risk losing your refund if you don't file your return. If you are due a refund for withholding or estimated taxes, you must file your return to claim it within 3 years of the return due date. The same rule applies to a right to claim tax credits such as the Earned Income Credit. The IRS holds income tax refunds in cases where its records show that one or more income tax returns are past due. They hold them until they get the past due return or receive an acceptable reason for not filing a past due return.
- Protect Social Security benefits - If you are self-employed and do not file your federal income tax return, any self-employment income you earned will not be reported to the Social Security Administration and you will not receive credits toward Social Security retirement or disability benefits.
- Avoid issues obtaining loans - Loan approvals may be delayed if you don't file your return. Copies of filed tax returns must be submitted to financial institutions, mortgage lenders/brokers, etc., whenever you want to buy or refinance a home, get a loan for a business, or apply for federal aid for higher education.
- If you owe more than you can pay - If you cannot pay what you owe, you can request an additional 60-120 days to pay your account in full through the Online Payment Agreement application or by calling 800-829-1040; no user fee will be charged. If you need more time to pay, you can request an installment agreement or you may qualify for an offer in compromise.
What if you don’t file voluntarily?
- Substitute Return - If you fail to file, the IRS may file a substitute return for you. This return might not give you credit for deductions and exemptions you may be entitled to receive. The IRS will send you a Notice of Deficiency CP3219N (90-day letter) proposing a tax assessment. You will have 90 days to file your past due tax return or file a petition in Tax Court. If you do neither, the IRS will proceed with their proposed assessment. If you have received notice CP3219N, you cannot request an extension to file.
If any of the income listed is incorrect, you may do the following:
- Contact the IRS at 1-866-681-4271 to let it know.
- Contact the payer (source) of the income to request a corrected Form W-2 or 1099.
- Attach the corrected forms when you send the IRS your completed tax returns.
If the IRS files a substitute return, it is still in your best interest to file your own tax return to take advantage of any exemptions, credits and deductions you are entitled to receive. The IRS will generally adjust your account to reflect the correct figures.
Collection and enforcement actions
The return the IRS prepares for you (its proposed assessment) will lead to a tax bill, which, if unpaid, will trigger the collection process. This can include such actions as a levy on your wages or bank account or the filing of a notice of federal tax lien. If you repeatedly do not file, you could be subject to additional enforcement measures, such as additional penalties and/or criminal prosecution.
Help filing your past due return
For filing help, call 1-800-829-1040 or 1-800-829-4059 for TTY/TDD. If you need income information to help prepare a past due return, call the toll-free number at 1-866-681-4271, or contact your employer or payer. Get online tax forms and instructions to file your past due return, or order them by calling 1-800-Tax-Form (1-800-829-3676) or 1-800-829-4059 for TTY/TDD. If you are experiencing a hardship and you can’t file your past due return, you can call or write your local Taxpayer Advocate Office for your state.
Already filed your past due return?
If you received a notice, you should send the IRS a copy of the past due return to the indicated address.
It takes approximately 6 weeks for them to process an accurately completed past due tax return.
Source: Internal Revenue Service at http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Filing-Past-Due-Tax-Returns