"Voluntary" Filing

If you come forward and voluntarily file your missing back tax returns, the system works usually works more in your favor.  Nationally, almost 75% of all income tax returns filed result in a tax refund, so the odds are that you are due a tax refund.  But you can't wait too long, taxpayers must file within three years of the original due date of the return in order to actually receive any tax refund that may be due. 

Involuntary Filing (IRS's Substitute for Return)

If you haven't filed an income tax return, and you don't respond to their request for you to file one, they will file one for you (it's called an SFR - Substitute for Return). How nice of them. However (surprise! surprise!) you probably won't like the one they file for you. It's their way of getting your attention, and given the large amounts of back taxes, penalty and interest they sometimes calculate, it works pretty well.

The SFR may assume that you are married filing separately, have no dependents, and no itemized deductions despite having previously filed as married filing jointly, having six kids, and paying mortgage interest nearing the size of the national debt.  Guess they just didn't notice these facts on all those prior year tax returns.

Using a licensed tax practitioner to prepare and file missing (back) tax returns or to amend your spouse's return to add your own income (or in some cases business or investment losses) to your spouse's original tax return, may result in a drastic reduction in the amount of taxes the IRS says is owed, or maybe even a tax refund!  And any reduction in tax liability will reduce penalty and interest as well.

Ignoring the situation

In our experience, 90% of people's tax problems are self-inflicted.  Ignoring notices from the Internal Revenue Service is definitely not a good idea, so what do you do about it?  Hire a federally-authorized tax practitioner who cannot only file current or back taxes or amend tax returns for you, but can also represent you before the IRS.

If the taxman comes looking for you, your life can be seriously disrupted, and you could be put in a very embarrassing situation.  They can, and will, make your life miserable.

The IRS could freeze or seize your bank account causing you to bounce checks, rack up late fees, and scramble to find the money to put groceries on the table.  A federal tax lien could be placed on all of your property including your house.

Your employer could be contacted in order to garnish your wages, sending most of your paycheck to the Internal Revenue Service instead of you.  Some employers take a dim view of this.

The IRS might even pursue criminal prosecution.  Trust us; no one looks good in an orange jumpsuit.