Haven't filed a tax return in awhile? You may owe the IRS!

If you haven't filed a tax return in a few years, you may still owe the IRS. You may have even been suprised when you received a Balance Due Notice in the mail from the IRS for years you haven't filed.

The reason for this is the SFR. An SFR stand for Substitute for Return. When you go more than 2 years without filing a return, the IRS might prepare a return for you. They will file you single with standard deductions. You will not get any other deductions that might be beneficial to you. Once they prepare a return for you and you owe tax, they will file that return and assess the tax against you. If they prepare a return for you and you are due a refund, they will not file that return. Thus, you will not get your refund. It is not in the best interest of the Treasury to hand out money on returns not filed by the tax payer.

Once your tax has been assessed, they will put you in the collections letter cycle.

Even though you have a SFR, you can still file a return on top of it with all of your deductions included and you correct filing status. This will file over the SFR and adjust your tax liability, but it will take months to process, so in the meantime, you need to be in a resolution with your supposed liability or the IRS will enforce collections (even if your return shows you don't owe). Doesn't seem fair but that's the way it is.

This is one of those areas where professional representation might be your best bet. It is very tricky when filing over SFRs and when filing old returns. If your returns don't match up to IRS records, you will be red-flagged for an audit for sure, delaying the whole process and even resulting in more penalties.

JUST DO IT !

The Nike philosophy is a universal truth that can save you money! As a senior tax consultant in a major tax resolution firm, I see cases all the time that could have been half the price for resolution. Every 4 years you don't handle a tax liability, it DOUBLES! I understand when folks tell me that they got scared. Fear and procrastination will cost them much more than they think. The common symptom most people have with tax problems is analysis paralysis. Action is what ignites every success. Action is what produces results. Knowledge is only potential power until it comes to someone who knows how to get himself to take effective action. If you want to reduce the amount you have to pay the IRS, then do your home work on some PROFESSIONAL TAX RESOLUTION FIRMS and JUST DO IT!

KISS OF DEATH !

Have you ever greeted someone with a hug or kiss and you could feel them knifing you in the back? If you have been around for more than a week I'm sure you have run into people who are nice to your face but really don't care a thing about you.
Unfortunately, the IRS has figured out that they can get much more information from tax payers by acting like they are there to help you. They will be down to earth and friendly. BEWARE… they have an agenda. They want you to tell them important information they need to do their job, COLLECTING YOUR MONEY! They need banking info, job info, anything they can use to ENFORCE COLLECTIONS! The IRS is a SUPER COLLECTIONS AGENCY. All their employees are trained to lull you into a false sense of security that they're going to HELP YOU. Make no mistake, they are there for one purpose and that is to collect. In 2007, over 4 million LEVIES and LIENS were issued. To do that, they need SOURCES (ie. banks, job etc.) A lot of times they get you to volunteer to write it all down and send them all the info they need to ENFORCE COLLECTIONS on you via a form called a 433 a, b or f. If you fill this out and send it to them, THEY HAVE YOU! Don't be unaware of their tactics. Get a PROFESSIONAL ORGANIZATION to help you.

The Collections Process and the IRS

The IRS is required by law to follow specific steps when notifying a tax payer of a tax liability. This is the Collections Due Process. The IRS has to follow these rules step for step. They only need to send notices to the last know address of the tax payer.

The process starts with a balance due notice, form CP14 or CP11. The balance due notice states how much is due and from which tax year.

After 10 days of sending the Balance Due Notice the IRS will send a second notice of demand for payment with form CP 501.

10 days after the CP501, a CP503 is sent with the same demand for payment.

When all the above notices are ignored, the IRS will send a CP504, Notice of Intent to Levy. This is always sent via certified mail.

In most cases a final notice of intent to levy is sent. This is letter L 1058. This step may be skipped by the IRS.

If the taxpayer ignores or fails to respond to all the notices, a Levy is placed against the taxpayer and a notice is then sent to the taxpayer informing them of the levy. The Levy Notice is form 668.

If you are in IRS collections, you may need help to handle the IRS. You want to act quickly when you start receiving these notices and not wait until you are levied which can leave you with no money that may be used to get help. It is always best to be proactive with the IRS. You want to deal with the IRS on your terms not theirs.