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.

The Top 4 Reasons We Miss Deadlines… (like April 15th)

Why do we allow ourselves to miss important deadlines (like April 15th)?  The first syllable (“dead”) on it’s own is hard enough to swallow. And then when you put another word like “tax” in front of it (“tax deadline”!!!), it can be overwhelming.
When it comes to April 15th, these are the four reasons I hear most often from my clients:
  1. I don’t have the time
  2. I don’t have the money
  3. I don’t know how to file (my tax situation has changed)
  4. I just can’t handle it right now
I don’t have the time
smart-watch-821567_640Let’s face it. You don’t have any more or less time than anyone else.
Sure you’re busy. But you’re not the only one with a job, children, church and/or other responsibilities. We all get 24 hours in a day; nobody else gets “bonus time”. In this light, you don’t really “manage” time; your challenge is simply to manage priorities.
Make the IRS a priority on April 15 so they don’t make you a priority later
I don’t have the money
Many people file an extension with the IRS, thinking it gets them more time to pay their taxes. It doesn’t. Even if you are granted a six-month extension to file, it doesn’t extend the deadline to pay which will still be April 15
In my experience, many people fear that they’re going to owe when they actually are going to get a refund. But they delay filing, only to learn later that their refund is reduced because of IRS penalties. Some delay more than three years and forfeit their refund altogether.
File now even if you don’t have the money. It doesn’t save you anything to delay.
I don’t have the know-how 
This reason is usually associated with a major life change. For example,
  • People get married and then don’t know whether to file jointly or separately.
  • People start a new business and then don’t know how to file their business taxes
  • People get an inheritance, or sell stock, or liquidate some 401(k) money, or buy rental property, and so on.
Any of these events can dramatically change how you file your taxes but it shouldn’t be so overwhelming, or your need for perfection so great, that you can’t get help or find the information you need to get the return filed
If you need to hire a tax professional, do it. Their fees will usually be more than paid for by the amount of taxes you save.
I just can’t handle it right now!
When it comes to the IRS, income taxes, finances, deadlines…  people can implode emotionally, shut down, melt down… lie down. We tend to do nothing, because the job seems too big to handle in light of everything else we’re dealing with in life.
The good news is you don’t have to get it all done today. Give yourself a few days, that is, choose to set your own deadline rather than someone else do that for you.
Maybe it will take a few hours to get your records together, gain knowledge on some tax laws, navigate tax software, or meet with an accountant. Break the tasks down into bite-size pieces and then take 20 minutes each day until you cross the finish line.
ANCHOR ON THIS: Meeting the April 15th tax deadline can feel like an overwhelming task. It’s easy to make excuses, or rebel against the outside pressure that an IRS deadline imposes on our lives. But if you choose to set your own deadline, and break down the task into small daily steps, you’ll gain confidence as you move forward, complete the project, meet the deadline, and ultimately save yourself time, money and stress.
Can you share other reasons you miss deadlines, tax or otherwise? Please feel free to add your thoughts via your comments below.