Unfiled Tax Returns

Under the rules of the Internal Revenue Service, not filing your income tax return is not only expensive, but it is illegal.  Harsh penalties are imposed upon individuals and businesses that do not file or pay their taxes.  Many people choose not to file because they cannot pay the taxes due.  However, not filing can make matters much worse than reporting the tax owed and working out an arrangement with the IRS.  Let Koontz & Associates, PL assist you with getting your tax return filed. 

The failure to file penalty is significant. The typical failure to file penalty when no fraud or negligence is involved is 5% per month on the total tax liability that is owed.  This penalty begins the day after the tax return was due.  When fraud or negligence is involved, the rate jumps to 15%.  Get help before penalties start.  Even if you have not filed in years, it is recommended that you start.  It is never too late to comply. 

If you can prove to the IRS that there was reasonable cause for your failure to file on time, the IRS may remove or reduce your tax penalties.  In order to do so you must file what is called a Request for Penalty Abatement.  The IRS handles each request for penalty abatement on a case by case basis.  If you have penalties that are a significant portion of your total tax bill, consider using Koontz & Associates, PL to review your tax situation and to negotiate with the IRS on your behalf.

Substitute for Return (SFR)

If you do not file your tax return, the IRS has a solution to start the collection process from you.  After months of notices requesting a return be filed, the IRS will create a substitute for your return.  A Substitute for Return (SFR) is a formal way for the Internal Revenue Service to make an estimate of how much you might owe for your taxes. The purpose of a Substitute for Return (SFR) is to calculate a definite dollar amount of your tax liability so that the IRS can begin collection efforts. The IRS uses its substitute tax return to issue a proposed assessment of taxes you owe and that calculation is based on all the income reported to IRS without consideration for any deductions to which you may be entitled.  Therefore, the balance is typically much higher than what is truly due.  

If you fail to respond to the proposed assessment, the IRS assessment will become final. Once the IRS assessment becomes final, the IRS can legally collect on the tax for a period of ten years.  The best way to avoid and resolve a Substitute for Return situation is to file a tax return.  If a Substitue for Return has already been filed, you can still file a return and reduce the tax due, if it is less than the estimate of the SFR.  Let Koontz & Associates, PL offer you proper assistance to avoid IRS tax issues.

Jo Ann Koontz

[email protected] 941-225-2615