Delinquent Tax Returns? Here’s 3 Reasons You Shouldn’t Rush to File

Do you have delinquent tax returns? Have you received an IRS Notice instructing you to file an overdue or un-filed return immediately?

Don’t do it. Not just yet, anyway.

Don’t get me wrong–I believe Americans should render unto Uncle Sam what is Uncle Sam’s (but not a penny more).

It’s very important to file and pay your taxes a timely manner. If you don’t, you will have to deal with the various attempts the IRS makes to get you to file. If you still don’t file, they’ll go ahead and file for you. And then turn you over to the world’s best collection agency to obtain the tax money you owe. (Now with that disclaimer out of the way, let’s proceed…)

Here’s three simple reasons (you probably haven’t thought about) why you shouldn’t rush to file delinquent tax returns:

  1. If you have a refund coming to you, and you file more than 3 years past the due date (including validprocrastinationextensions), most of the time the IRS will keep the refund. The IRS will not even offset the refund against an old tax liability from another year.
  2. If you are in an Installment Agreement to pay a prior tax liability, or in an Non-Collectible Status, the filing of any return or the paying of any tax late will void the agreement.  This will cause all money to become due immediately.  Often when an agreement is in default, taxpayers find out via a levy on their bank account, their spouse’s paycheck, a lien on their house or seizure of other property.
  3. You’ll likely regret not giving yourself sufficient time to reflect on the accuracy of the return. Don’t let the IRS, bully you into filing a return so quickly that it is full of errors. This may increase your tax debt or cause an examination.

ANCHOR ON THIS: IRS Notices can be intimidating, in both format and tone. But don’t let their deadlines and strong language mislead you. Don’t operate out of fear by letting the IRS dictate how and when to proceed. A knee-jerk reaction can adversely affect your IRS tax matter in the long-term. For more information on how to deal with the IRS to resolve your tax matter, permanently, contact a tax pro who specializes in IRS Representation.

4 Reasons Not to Hit the Panic Button After You Get An IRS Notice

You filed your return. You paid your tax. But now, just when you thought this year’s taxes were wrapped up and put away, you find an IRS Notice in your mailbox.

Don’t hit panic panic button!

Here’s 4 reasons why:

1. You’re not alone.

The IRS sends millions of notices and letters out each year. Many are computer-generated, because these days the IRS relies less on employees to get directly involved in issues including collections.

2. Many notices are simply routine.mums-219436_1280

These can be resolved with a few simple steps. For example, you may need to file an additional tax form. The IRS may have been unable to make a direct deposit for your refund and, instead, is sending a refund check. Or you might have missed a small amount of interest from a bank account. With more than 100 types of federal tax notices (see “Common IRS Notices,” below), the possibilities for IRS inquiry are endless.

3. Focus only on the issue at hand.

The envelope may be thick, and the letter itself several pages long, but look for the key sentence (usually right there on the first page) that states the problem at hand. The IRS has redesigned their standard notices to look less like legal documents. The language is generally easier to understand than in the past. Identify the problem, then follow the instructions to resolve the issue.

Say the IRS proposes a correction to your return. If you do not agree with the correction the IRS made, it is important that you respond as requested. You should send a written explanation of why you disagree. Include any information and documents you want the IRS to consider with your response. Mail your reply with the bottom tear-off portion of the IRS letter to the address shown in the upper left-hand corner of the notice. Allow at least 30 days for a response.

4. There are times when the IRS is wrong.

black-40636_150Remember, many notices are computer generated, meaning no one at the IRS has reviewed it before you received it. Which can lead to simple mistakes. Say you claimed interest income from Bayview Savings on your return. But the 1099 filed with the IRS reads “Bayview Federal Savings Bank”. The computer doesn’t match up the names, so you receive a standard CP 2000 notice stating you didn’t claim the income, proposing additional tax, and charging you interest and a penalty to boot. It’s a simple mistake. Follow the instructions. It’s a simple fix.

ANCHOR ON THIS: No one likes to find an IRS Notice in their mailbox. But no one needs to hit the panic button. It’s a first notice. Should you take it seriously? Yes! Never ignore an IRS letter! Never set it aside with a stack of bills you’ll get to sometime later. But there’s no need to freak out. Breathe. Open the letter. Identify the problem. Resolve it (which you should be able to without calling or visiting an IRS office). For more information, visit, or contact a tax relief professional who specializes in IRS representation.