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Didn't File Your Tax Return?

Non-Filers: What You Need to Know, and Why You’re Not Alone!

Tax season begins the first quarter of the year, and as the deadline approaches, there are a majority of people in Los Angeles and other cities who have not filed their taxes. Since the pandemic in 2020, many Americans have been laid off from their jobs and fallen into economic hardships. Even though the country is slowly attempting to recover, many Americans have still fallen on hard times struggling to keep food on the table and a roof over their heads. Many taxpayers fail to file their tax returns because they fear they have not earned enough money to receive a tax refund. If you did not file your tax return due to these hardships, you are not alone.

Many Americans may miss out on their tax refunds simply because they did not file their delinquent unfiled returns. However, the IRS can file a return for you, known as, a substitute for a return (SFR). In other words, the IRS will prepare a tax return based on information from a taxpayer’s file.

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What Happens if I Receive a Substitute for a Return? Is There a Timeframe for Completion?

If you fail to file your taxes after a few years, the IRS will send you an assessment letter for a substitute tax return. You have about 30 days to take action. If you do not respond after 30 days, the IRS will send out a Notice of Deficiency. The substitute tax return will be prepared without credits or deductions, and a balance owed. If the complete the assessment within the timeframe, you can still receive a refund or have the refund applied to any balances due with the IRS.

What Does an Assessment Letter Consist of? How Can I Take Action if I Receive an Assessment Letter?

The taxpayer will receive a notice in the mail indicating a substitute for a tax return. The assessment letter consists of taxes that are due based on W-2, 1099, and other tax documents the IRS uses to calculate the tax. There are three courses of action. A taxpayer can:

  • Send in a signed and completed tax return.
  • Send a statement regarding that they are not required to file a tax return and why.
  • Send the IRS a signed and dated Consent to Assessment and Collection Form.
How Can I Take Action if I Receive a Notice of Deficiency?

A taxpayer has three options:

  • They can either file an original tax return
  • They can petition the Tax Court within 90 days of receiving a Notice of Deficiency.
  • Send a statement why they are not required to file a tax return and why.
Is it Mandatory for Everyone to File Taxes?

Everyone is not required to file taxes if their income does not exceed certain thresholds. The amount of income you earn depends on your age, filing status, and type of income.

I Did Not File My Taxes This Year. What Are the Penalties?

You may not encounter any penalties for failing to file your taxes. However, if you wait too long to file your tax return, you may risk losing your refund. Moreover, individuals who owe on their taxes may experience penalties and interest fees if they don’t file on time. The penalty for not filing your taxes is 5% of unpaid taxes for every month, with a max amount of 25%. The IRS will charge 0.5% for every month a taxpayer fails to file. Taxpayers in Los Angeles and other cities can file for an extension till October 15. Moreover, the IRS offers free filing resources on their website for those who receive an income of $72,000 or less. Some residents may receive automatic extensions that were affected by the winter storms in February 2021: Oklahoma, Texas, and Louisiana. Residents living in those states can file until June 15, 2021.

Are Financial Hardships a Reason Not to File My Taxes?

Understandably, many Americans did not file their taxes due to economic hardships. While the country is battling the pandemic, many Americans have encountered job losses and financial burdens that will result in issues with the IRS. If you have experienced any financial hardships, you are not alone. Generally, financial hardships are not an excuse to neglect to file your taxes. Eventually, the IRS will identify you as a non-filer or tax debtor, which results in tax liens. However, you can partake in strategies that can settle your tax problems and place you in a better position.

What Are Some Other Reasons for Failing to Pay Taxes?
  • Financial hardships (Going broke) - The taxpayer may be using most of their income to pay off loans or other obligations. The best option is to hire a tax resolution expert.
  • Unavoidable circumstances - This can be the death of a loved one, going through a divorce, or a sudden illness.
  • Tax return errors - If you apply for tax credits that you do not qualify for, the IRS will adjust your taxes to reflect what you owe. Those mishaps may result in owing more money to the IRS.
  • Misinformation - Seeking advice from an unqualified tax expert can result in neglecting certain tax obligations. Taxpayers in Los Angeles and other cities should only seek help from a tax professional to avoid these mishaps.

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Are There any Options for Dealing With Back Taxes if I can’t Pay Them Right Away?

If you owe taxes and can’t pay them right away, here are some options:

  • Offer in Compromise Program (OIC)
    • This program allows you to settle your taxes for a lesser amount than what you owe. It is the best option if you cannot pay your tax liability in full. There are newer tax regulations that give taxpayers a better chance of qualifying. For the OIC to be accepted, you must inform the IRS that you cannot pay off the tax liability, doubt stating the taxpayer owes the tax liability, or if the settlement contributes to an effective tax administration (ETA).
  • Hardship Status - CNC
    • The IRS defines hardship as a “non-collectible status.” You can apply for the IRS Hardship if you owe taxes but are not able to pay them if you only have enough money to support yourself and/or your family. In such situations, the government will back off until the taxpayer recovers. You may be able to qualify for the offer in compromise or certain bankruptcy laws.
  • Payment Plans
    • With the help of a tax advisor, they can negotiate a long-term payment plan with federal and state tax agencies.
  • Penalty Relief
    • If you have dealt with tax issues in the past, penalties and fines can seem overwhelming. However, the IRS allows you to avoid these penalties if you have a reasonable cause. A reasonable cause is based on the facts and circumstances of every situation. It is not available for every penalty, but there are some exceptions. Some examples include:
      • The death or illness of a taxpayer or family member
      • An absence of a taxpayer
      • Marital issues
      • Mail Delivery/postal delays & others.
    • A reasonable cause is granted when:
      • The taxpayer has established business care and prudence to determine tax obligations but was not able to comply.
      • A taxpayer fails to file on time due to a reasonable cause or hardship.
      • An “absence of fault” occurs. In other words, the taxpayer must provide proof that the failure was unintentional or a result of carelessness.

Other options include:

  • Release of liens - In certain circumstances, tax liens can be released.
  • Tax bankruptcy - Some taxes can be forgiven if you experience bankruptcy if certain conditions are met.
  • Audit reconsideration - The IRS can reevaluate audit findings if there is new evidence.
  • Filing an accurate tax return - This can help reduce tax burdens and qualify you for a tax refund.
What Is Tax Compliance?

Tax compliance is observing and understanding the federal, state, and international tax regulations and requirements that are set forth by the government and taxing authorities. For example, if the deadline to file taxes is April 15, those in Los Angeles and other cities who do not file their tax returns are considered non-compliant. Non-compliancy can result in unwanted penalties and fines.

The same goes for businesses, but their accounting, reporting, and tax filings have different tax regulations. Businesses must pay:

  • Property taxes on business and real-estate assessments
  • Employment and payroll taxes
  • Taxes on dividends
  • Franchises and/or gross receipts
How Can I Comply With Tax Regulations?

The IRS provides helpful resources that support compliance and fairness with tax regulations. IRS employees who enforce tax laws will make contact with you and figure out what is the best way for you to pay up. Here are some examples of compliance tools:

  • Tax Examiners (TEs) and Tax Compliance Officers (TCOs) perform audits and reviews to enforce difficult tax audit laws and account problems.
  • Revenue Agents (RA) audit complex tax returns and secure taxes that are owed.
  • Revenue Officers (ROs) works on cases that involve the amount owed by a taxpayer or a collection of delinquent taxes that are due.
  • Criminal Investigation Special Agents investigate tax fraud and other financial crimes.
How Can Tax Professionals Ensure Tax Compliance?

Tax professionals in Los Angeles and other cities ensure individuals and businesses are aware of the tax regulations that apply to their situation. Furthermore, they have the expertise of the best practices for tax planning and current tax laws. Tax professionals can help individuals with unfiled returns and businesses maintain tax compliance even if there are changes in tax regulations.

Get a free evaluation today 1-877-788-2937.

Client Reviews
★★★★★
Mike has given us peace of mind! He helped negotiate down a large balance and get us on a payment plan that we can afford with no worries! The stress of dealing with the IRS is huge and Mike helped us through it all. The peace of mind is invaluable, thank you Mike! April S.
★★★★★
Mike Habib - Thank you for being so professional and honest and taking care of my brothers IRS situation. We are so relieved it is over and the offer in compromise process went just as you said. Mike is very professional and will give you honest answers to the OIC process and you can really trust him. You won't be sorry you chose him! Joe and Deborah V.
★★★★★
Mike is a true professional. He really came thru for me and my business. Dealing with the IRS is very scary. I'm a small business person who works hard and Mike helped me see that they are not that scary after all. He was always there with the answers I needed and was very good about calling me back which I appreciated since your first reaction is to freak out and ask a million questions. He solved a messy case and worked very hard to resolve it. His rates are VERY reasonable for the amount of work he does! I give him my highest recommendation! Marcie R.
★★★★★
Mike was incredibly responsive to my IRS issues. Once I decided to go with him (after interviewing numerous other tax professionals), he got on the phone with the IRS immediately (as in the same day I signed with him) to squash an impending issue. And he worked directly with them to quickly come to a resolution I am very happy with. I'd highly recommend reaching out to Mike to see if he can help you with any IRS issues. I'm very satisfied! Marshall W.
★★★★★
I’ve seen and heard plenty of commercials on TV and radio for businesses offering tax help. I did my research on many of them only to discover numerous complaints and unresolved tax issues. I found Mike Habib through my own online search and contacted him. He was very professional with great communication, always answering my questions and concerns. Mike resolved my complicated tax problem just as he said he would. I would definitely recommend his services to family and friends. Nancy & Sal V.