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Most Common Problem: Not Filing Tax Returns and Still Owing a Balance

03/30/2016

A very common problem that we come across at Platinum Tax Defenders, and one of the easiest to remedy, is a client who has not filed their tax returns.  The range for non-filing stretches from the most recent year, to their last 20 years!  Many of these persons will then receive a garnishment and are stuck with the question of HOW CAN I BE COLLECTED UPON FOR A YEAR IN WHICH I NEVER FILED A TAX RETURN?The answer to this is that the IRS will prepare what is called a substitute for tax return on your behalf that will not give you any deductions or any credits, and normally ends up with a balance due.  Using this balance, the IRS will then begin collection actions such as levies and garnishments.
Another big question to resolve is HOW MANY YEARS DO THEY FILE? Most of our competitors will jump all over this question with a textbook answer:  ALL OF THEM.  But actually, that is often NOT the case.
To be compliant, you must have the last six years of required returns filed.  Required returns are those in which your income level is high enough to require a return to be filed.  Therefore, for the most part, we start with six years of returns.  Beyond that, we look for substitute for returns.  If the IRS prepared these, we would want to file reconsideration returns to get an accurate return filed on your behalf and hopefully reduce your liability just by filing a return.
CASE EXAMPLE:
A client has somehow not filed since 2001.
The IRS filed substitute for returns for 2003 and 2005 for the taxpayer creating a $20,000 liability.  The taxpayer received no income in 2012 also.
To help this client we would recommend filing 2003, 2005, and then 2007-2011, only seven years of returns, not the 11 that our competitors may charge you for.