Unfiled Tax Return Help

Unfiled Tax Returns

We understand the everyday stresses of life and its demands doesn’t make filing tax returns everyone’s number one priority. No matter the reason if your one of those taxpayers that has not or doesn’t file your income tax returns take notice. By law there are filing requirements and if you meet these requirements you must file a tax return.

If your total income in a given year doesn’t exceed certain thresholds, then you don’t need to file an IRS tax return. The amount of income that you can earn before being required to file a tax return also depends on the type of income, your age and filing status. Go the IRS website for further information.


What are the due dates for filing one’s tax return in almost all cases? 

  • Form 1040 series for individuals: April 15th
  • Form 1120 series for corporations: March 15th
  • Form 1065 series for partnerships: March 15th for years beginning after December 31, 2015 prior to 2015, partnerships returns were due April 15th

Can I lose my tax refund if I don’t file my taxes?

The answer is yes. Unless the taxpayer files his/her tax return one cannot receive a refund or worse lose the ability to receive a refund. Taxpayers in general have three years from the due date of the tax return to file and ask for their refund. If you don’t file within that time period you’re no longer eligible to receive a refund.

Tax Penalties and Interest

The IRS generally assesses interest and penalties when returns are filed late. The penalty for filing late is generally 5% of the taxes you owe per month for the first 5 months up to 25% of your tax bill. In addition the IRS will also charge interest until you pay off the balance.

Substitute for Return (SFR)

Since the IRS may not have complete information about a taxpayer, it may go ahead and prepare the SFR for the taxpayer and overstate their taxes owed. This often leads to owing more taxes or receiving less refund than if you had filed your own return. Accordingly, in most cases, it’s still in the taxpayer’s best interest to file their own return to take advantage of any exemptions, credits and deductions their entitled to receive.

The IRS begins the SFR process by sending a letter informing you that they have not received a return for the applicable year(s) and proposing a tax liability (i.e. assessment plus additional penalties and interest) based on your income from those years. You have 30 days to submit a completed 1040, agree to signing a Consent to Assessment and Collection form, or submit a return letter that provides the reasons you are not required to file or any other special circumstances you feel the IRS needs to consider.

If you don’t respond within 30 days, the IRS sends a statute notice of deficiency (SND) known as a 90-day letter. This letter notifies you that the IRS is going to assess the tax owed along with any penalties and interest, and it also informs you of your right to petition the U.S. Tax Court within 90 days of the date of the letter. If you don’t respond to the SND, the IRS can assess taxes and begin collection efforts, including liens, levies and garnishments.

Collection Actions

When you file a tax return or the IRS files an SFR that shows a balance due, the IRS will try to collect that amount. This means that the IRS may file a lien that attaches to your property or rights to property or worse take aggressive action such as placing a levy on your bank account, wages or other sources of income.

Tax Return Identity Theft

An area of increasing attention is identity theft. If one does not file his/her tax return someone else might use and or steal your identity, use your social security number and file a false tax return. If this happens when you do file your previous years returns and get current, your return and any refund will be delayed while the IRS determines which return is correct.

What is the IRS statute of limitations on unfiled tax returns?

The tax code provides distinct statutes of limitation (S/L) for assessment, collection, and refunds that can be confusing to taxpayers. There is no statute of limitations on an unfiled return, meaning there is no time limit for IRS to prepare a Substitute for Return (SFR). Once assessed, the 10-year collection statute of limitations applies. The refund statute of limitations technically does not apply to SFRs but on a practical level the issue is moot since the IRS is not known to make SFR assessments for years it is clear the taxpayer had an overpayment. As to refunds, Sec. 6511(a) and Regs. Sec. 301.6511(a)-1(a) provide three (3) years from the date of filing the tax return to claim a credit or refund, or two (2) years from the date the tax was paid, whichever is later. For purposes of the limitation, a return filed, or tax paid before the last day prescribed for its filing or payment (without regard to extensions) is considered filed or paid on that last day (Sec. 6513(a)).

If no return is filed, Regs. Sec. 301.6511(a)-1(a)(2) provides the taxpayer must file the claim for credit or refund of an overpayment within two years from the time the tax was paid. For example, consider a taxpayer who has a job and had income taxes withheld that would have entitled him/her to a refund. The taxpayer elects not to file a tax return for that year, he/ she must file a claim for a refund within 2 years of the date the return would have been due.

Finally, if an SFR is prepared and filed by the IRS, the S/L for collection purposes is 10 years from assessment. Then sometime later the taxpayer has a return prepared and filed, the S/L is not affected unless the balance owing is increased (of course one would have to ask why prepare and file a return to show the taxpayer owes more). In such situations the clock starts anew. When replacing an SFR the greater likelihood is that a taxpayer will file a return showing the balance owed is less than what the SFR shows. In such cases, then the S/L is not extended.

How do I file unfiled tax returns?

For the taxpayer that has unfiled tax returns contact the IRS immediately to determine your account standing with them. Find out when your case is assigned to (if appropriate) and determine whether they have already filed a return for you (SFR). At the same time you contact the IRS, you can request and receive your wage and income transcripts for those unfiled years. If an assessment of taxes has already been directed to your account, request additional time to file for those unfiled years.

To resolve your matter of unfiled tax returns, gather all of the available information you can about investments and any other income in addition to your W2 and 1099 wage and income transcripts the IRS may not have. Remember, your account transcript should also have any estimated payments or other credits to your account for those unfiled years. Do a thorough review for those years in question to ascertain any credits, deductions, etc. that you may be entitled to. Also make sure you or your tax preparer understands IRS policy 5-133 dealing with delinquent returns. This maintains that in general a taxpayer must file six years of back tax returns to be in good standing with the IRS. As referenced previously though, there is no statute of limitations so the IRS can deviate from that 6-year rule.

If you owe unpaid taxes as a result of your overdue returns, don’t have the money and want to set up your own resolution with the IRS, apply for a payment plan when you file your past due returns. You can do that online with the IRS or via the US Mail. If you are unable to pay the amount due upon filing of the returns, you may want to explore other IRS options such as an Installment Agreement, Currently Non-Collectable (CNC), Partial Payment Installment Agreement (PPIA), or an Offer in Compromise (OIC).

The W Tax Group accounting team and tax professionals are here so you don’t have to face the IRS alone. We will help you fix, submit and correct your unfiled returns. Together our team will make sure to get you the absolute best outcome for your situation. Contact us today for your free consultation.