Ask the Taxman- Unfiled Returns
Question: I haven’t filed tax returns or paid taxes for a few years and my records are not in the greatest shape. How can I get my returns filed?
Answer:
Under the IRS’ Voluntary Disclosure program it may be possible to file returns without incurring criminal penalties. In most cases, IRS’ policy is to accept the last six years of unfiled returns without seeking criminal penalties. Depending on the ultimate solution to any liabilities, you may need to be 100% compliant, meaning all returns filed.
Incomplete records do pose a problem that can be partially resolved using IRS and state transcripts, without causing alarm. The IRS and state transcripts will show income, withholdings and some expenses, such as mortgage interest. They usually will not complete the full picture, but they are a great start. Bank statements are also a good source for information about income and deductions.
Do not make the mistake of not filing because you feel you may owe. Being in compliance (all tax returns filed) is your key to other tax resolution options such as Offers In Compromise, Bankruptcy, Innocent Spouse and Installment Agreement.