Filing Delinquent Returns

Our Lawyers Help U.S. Taxpayers Who Need to File Delinquent Returns Avoid Unnecessary Penalties

**Attorney Alina Veneziano**
Filing Delinquent Returns Attorney & CPA Team Lead

**Alice Campbell**
Filing Delinquent Returns Team
Former Special Agent (IRS)

The Internal Revenue Code requires that U.S. taxpayers report their worldwide income from all sources on an annual basis. But, for many taxpayers and businesses, this is just the start of their filing obligations. From quarterly estimated tax returns to foreign financial asset disclosures, taxpayers may owe a variety of other obligations to the Internal Revenue Service (IRS) as well. As a result, mistakes and oversights are common, and many taxpayers find themselves in the position of needing unfiled tax returns help.

We assist U.S. taxpayers with filing delinquent returns. Before doing so, however, we also ensure that our clients are taking the necessary steps to protect themselves. While filing delinquent returns may be necessary to come into compliance, it also triggers penalties, and there are options that taxpayers can use to mitigate their liability in many cases.

Filing delinquent returns can also trigger a tax audit or criminal tax fraud investigation. As a result, for many taxpayers, filing delinquent returns is not the end of their controversy with the IRS, but rather just the beginning. Audits and investigations can be invasive—and they can present substantial risks—and, once an audit or investigation is underway, many of the options for securing a favorable resolution with the IRS go off of the table.

Assistance with Filing Delinquent Federal Tax Returns

As noted above, U.S. taxpayers may owe various filing obligations to the IRS. Failure to file any tax return or other necessary form with the IRS triggers immediate penalties. If a failure to file results in non-payment of federal tax, it triggers immediate liability for back taxes (and additional penalties) as well, and all back taxes and penalties accrue interest from the date they are due.

This means that if you are behind on your federal filing obligations, time is of the essence. At Oberheiden P.C., we assist U.S. taxpayers with filing delinquent returns and forms including (but not limited to):

Individual federal income tax return
Corporate and partnership income tax returns
Estate and trust income tax returns
Quarterly estimated income tax returns
Payroll tax returns
Offshore disclosure forms (FBAR and IRS Form 8938)
Other required disclosure forms such as IRS Form 1098 and 1099 (and their variants)

Whether you know what returns you need to file or you are unclear on the full scope of your (or your company’s) federal filing obligations, our lawyers can assist you with coming into compliance. We can also assist you with understanding the risks involved, and we can assist with pursuing alternatives as necessary.

Dr. Nick Oberheiden

Founder

Attorney-at-Law

Lynette S. Byrd

Former DOJ Trial Attorney

Partner

Brian J. Kuester

Former U.S. Attorney

Hon. Kevin McCarthy

55th Speaker, U.S. House of Representatives (ret.)

Government Consultant

Mike Pompeo

Of Counsel

Former U.S. Secretary of State

John W. Sellers

Former Senior DOJ Trial Attorney

Linda Julin McNamara

Federal Appeals Attorney

Nicholas B. Johnson

Former Prosecutor

Roger Bach

Former Special Agent (DOJ)

Chris J. Quick

Former Special Agent (FBI & IRS-CI)

Michael S. Koslow

Former Supervisory Special Agent (DOD-OIG)

Ray Yuen

Former Supervisory Special Agent (FBI)

Alternatives to Filing a Delinquent Tax Return with the IRS

As a general rule, the obligation to file federal tax returns does not go away. If any of your (or your company’s) returns are past due, you will need to file the past due date tax returns in order to come into compliance.

But, filing delinquent returns may not be your only option—and it isn’t necessarily the first step you should take when you have unfiled tax returns or are behind on your obligations to the IRS.

While the IRS advises, “[y]ou should file all tax returns that are due, even if you can’t pay your liability in full,” simply filing a delinquent return can be risky (especially if you can’t pay the full amount you owe). The IRS charges underpayment penalties as well, and underpayments can also lead to audits and collection actions. These collection actions may include the placement of IRS liens and levies on your (or your business) property. With this in mind, in addition to filing any delinquent returns, it may also be prudent or necessary to consider options such as:

Submitting an Offer in Compromise

If you need to file a delinquent return and cannot afford to pay the full amount of your tax bill ((or your business owes) to the IRS, you may be eligible to submit an Offer in Compromise (OIC). If you meet the eligibility criteria and submit a reasonable offer (along with partial payment), you should be able to settle your federal tax debt for just a fraction of the total amount of taxes owed. Eligible taxpayers and business can use OICs to reduce their tax liability for back taxes, interest, and penalties.

Requesting an Installment Agreement or Payment Plan

Taxpayers who need to file delinquent returns and who do not qualify to submit an OIC may qualify for an installment agreement or payment plan. Entering into an installment agreement or payment plan affords three important benefits: (i) it mitigates liability for penalties and interest; (ii) it prevents the IRS from pursuing collection action; and, (iii) it substantially reduces the likelihood of facing an audit due to suspected noncompliance.

Making a Voluntary Disclosure

While submitting an OIC or requesting a payment plan can help to mitigate your liability and risk when filing delinquent returns, neither of these options provides protection if you willfully failed to submit all required filings on time. Willful underreporting can be prosecuted as tax evasion, which is a serious federal crime. For taxpayers and business who may be at risk of facing criminal charges, making a voluntary disclosure to IRS Criminal Investigation (IRS CI) will often be the first step toward securing a resolution that avoids a grand jury subpoena and indictment.

Seeking Penalty Relief from the IRS

While taxpayers who have delinquent returns can face failure-to-file and failure-to-pay penalties (among many others), the IRS offers a variety of penalty relief (or penalty abatement) programs. Our lawyers can determine if you qualify for penalty relief; and, if you do, we can assist you with submitting all of the necessary filings to minimize how much you owe.

Seeking Currently Not Collectible (CNC) Status

Another option for taxpayers and businesses who owe more than they can afford to pay is to seek currently not collectible (CNC) status. Securing CNC status requires proof of significant financial hardship; and, while the IRS generally will not pursue collection from a CNC taxpayer, it will continue to assess interest and penalties. As a result, seeking CNC status is generally an option of last resort for taxpayers who need to file delinquent returns.

FAQs: Filing Delinquent Tax Returns with the IRS

What Should I Do if I Have Delinquent Federal Tax Returns?

If you have unfiled federal tax returns, you need to make coming into compliance a priority. Even if you do not owe any tax to the IRS, failure-to-file penalties still apply, and these penalties begin accruing interest immediately. If you owe tax to the IRS, the risks of having delinquent tax returns are even greater. If the IRS opens an audit before you file your delinquent returns, this will increase the risks involved as well.

Can I Avoid Filing Delinquent Returns By Disclosing Past Years’ Income in This Year’s Return?

Disclosing previous years’ income in a current year’s tax return generally is not advisable. The IRS refers to this as a “quiet disclosure,” and it disfavors this approach. Making a quiet disclosure is more likely to trigger an audit than submitting a delinquent return, and facing an audit after making a quiet disclosure can lead to substantial liability. With that said, submitting delinquent returns carries risks as well, so an informed and strategic approach is required.

Can Having Delinquent Federal Tax Returns Trigger a Federal Investigation?

Yes, having delinquent federal tax returns can trigger a federal investigation in some cases. If the IRS has reason to suspect that you willfully failed to file any returns, it can initiate an investigation focused on substantiating charges for federal tax evasion or tax fraud (potentially among other federal crimes).

What Are the Penalties for Failing to File a Federal Tax Return?

The IRS charges a failure-to-file penalty rates equal to five percent of the unpaid taxes for each month (or part of a month) that the return is late, subject to a maximum penalty of 25 percent. If a taxpayer’s failure to file triggers a criminal investigation, allegations of tax evasion or tax fraud can lead to a $100,000 fine ($500,000 for organizations) and up to five years of federal imprisonment.

Do I Need a Lawyer to File Delinquent Returns with the IRS?

We strongly advise consulting with a lawyer before you file delinquent returns with the IRS. While filing delinquent returns may be a necessary step for coming into compliance, filing delinquent returns without taking additional steps to protect yourself can be extremely risky. A lawyer who has experience advising on unfiled tax returns help you fully understand your situation, evaluate your options, and make informed decisions about how to move forward in dealing with the IRS.

Can I get a Tax Refund if I Miss the Tax Filing Deadline and Don’t File My Return?

If you don’t file your tax return, you will not get any tax refunds in most cases. You only have 3 years to claim old tax refunds or tax credits. The longer you wait to file, the more penalties you will accrue from the IRS. So, even if you have a refund, the penalties and interest charges may outweigh the refund. However, as long as you file before you run out of time, filing late does not disqualify you from obtaining a tax refund from the IRS.

Unfiled tax returns help from a Federal Tax Lawyer at Oberheiden P.C.

If you need to know more about how to resolve delinquent tax returns with the IRS, we encourage you to get in touch. We represent individual and business taxpayers throughout the U.S. and worldwide. To request a complimentary initial consultation with a federal tax lawyer at Oberheiden P.C., please call 888-680-1745 or contact us confidentially online today.