What can happen if you don’t file a tax return?

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Not filing a tax return is not a situation to take lightly; failing to file your income tax returns is a criminal offense.

Every day the massive computer center at the IRS is getting more sophisticated. And what can happen is that information, from a bank account that pays interest, a paycheck or 1099, will be received by the IRS and this will flag the fact they do not have a tax return to match up to the information to.

For non-filer’s just a matter of time before the IRS catches up with them.

Why is not filing a tax return is the worst thing you can do?

Not filing a tax return never goes beyond the statue. When you file a tax return there is a 3 year statute of limitations. When you do not file a tax return the 3 year clock does not start to tick. It never goes away, the problem continues.

You could get a letter 10/ 20 years later asking for that tax return.

If the IRS asks for a copy of a non-filed tax return and does not get a response, they will file the return. To get attention they will file an estimated tax return. This return will be wildly overstated by estimating income and disallowing all deductions.

The IRS will continue to send notices demanding the payment of the wildly overstated return and wildly overstated taxes due.  If these notices get ignored, the file goes to collections. The IRS will issue a liens and levy for payment. And if there are any assets that are owned by the individual, their spouse or business, like checking accounts, autos, stocks, paychecks, and even Social Security checks they can be taken!

Imagine waking up one morning and finding all your bank accounts have been cleaned out. As bad as that is, a worse method is a wage levy (or garnishment). That’s when part of your pay check goes to the IRS.

Or they will seize assets, such as homes, cars, jewelry, insurance polices, and even retirement funds.

If you have received a notice from the IRS or any tax agency, or know of someone who has…contact me for a free consultation.

I can request and review a copy of their IRS, FTB, BOE or EDD files. Many times with the proper filing or amendments the tax burden can be severely reduced. If there actually is a balance due we can request abatement, an offer in compromise, a payment plan, or review other solutions like bankruptcy or innocent spouse relief.

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