What to do about unfiled tax returns with the IRS

If you have years of unfiled tax returns outstanding,  you might be experiencing a wide range of questions, like:

  • Is this problem too big to fix?
  • Will it go away on its own if "lay low?"
  • Can I be charged criminally?
  • Assuming I wanted to file old tax returns, how do I do that if I am missing W-2 or 1099s?


Is this unfiled tax return problem too big to fix?

Probably not. Millions of Americans have unfiled returns. The IRS has entire processes built specifically around unfiled returns. Our software goes back to the year 2000. And if there was ever a reason to go back further, the IRS actually has available for download every year of tax return forms since 1913.


Does every missing tax return have to be filed?

Probably not. There are a few different rules in place. Depending on your situation, it could be three years, six years, or eight years. But you only have to file if you had a filing obligation in the first place. For instance, if you were a full-time student and made no income, you do need to file a tax return.


I am worried about how much I will owe if I file my returns

This is a common reason why people don't file in the first place in the first place. They are afraid of an IRS bill they can't pay. Bear in mind that owing the IRS money is not a crime. If it was there would be over a million more people in jail. What is a crime is trying to hide income, or hide an ability to repay the IRS. Yet, having unfiled returns are the reason why many negotiations with the IRS fail.

For more information about payment options with the IRS, click here


Will this problem go away if I lay low?

Probably not. The IRS can automatedly generate a tax bill for you even if you don't file a return. And these amounts are generally far higher than what you actually owe, so you are more likely to attract unwanted attention.


Can I be charged criminally?

You could be. But few people are charged with failing to file a tax return. Most tax evasion cases involve situations where taxpayers file a return but understate their income.


What if I'm missing W-2s or 1099s or K-1s? How can I file?

This is an issue we regularly tackle for our clients.  We do thorough investigations to ensure we have accurate numbers that we know the IRS will accept, even with no original documents. We’ve even correctly reconstructed profit and loss statements with very little information.


If you are trying to solve this problem by yourself, then you will want to request Wage and Income transcripts from the IRS for the years you need to file. If you aren't sure what years you need to file and would want someone else to request the correct forms, then click on the box below to learn about our investigation service, Total Tax Diagnosis.



Success story:


Alan was a self-employed carpenter. Years ago, he owned a large real estate development company and had many employees. The business had problems. He decided to downsize and now just likes to do custom work for a few customers. The IRS has been sending him threatening letters telling him he had to file his tax returns, and for some years, they sent him tax bills. They were jaw-dropping: $540,000 for 2005! Alan didn’t know what to do. He lost a lot of records from his real estate development company and had no idea what needed to be done. So he called us.


Immediately, we found out that there was a Revenue Officer assigned his case. We called the Revenue Officer to tell her that Alan hired us and we asked for two weeks to complete 8 returns. The Revenue Officer agreed to our request and she mentioned to us that it was good that we called, as she was about to levy Alan’s bank accounts and all of his customers. Alan laughed when he found out and said “I guess there was a reason I called you guys.” We were then able to reconstruct Alan’s records using bank statements and some flood-damaged invoices.


We got all the returns done within our two-week deadline and the Revenue Officer was very happy with us. Because Alan had losses, we were able to apply those to earlier returns. He was very surprised and very relieved to find out he only owed $24,000. Alan has been paying it off at $450 a month and thinks it's funny that a bill for $540,000 for one year has been reduced to $24,000 for 8 years. He says he’s learned his lesson and will never procrastinate on taxes again.


Identities and certain facts have been changed to protect the identities of clients. These stories aren’t intended to be a promise of how your case will turn out. All facts are different, and, outside of tax or federal court, approval of the final resolution is up to the IRS.

Get inspired. Read more client stories here.