Years I did not file taxes
March 1, 2014 10:04 AM   Subscribe

There were a few years when I did not pay state or federal taxes. I'm not sure exactly which years, but probably 2001-04 is the window of time I'm looking at. I put it off until the last minute, then got overwhelmed by the paperwork and the forms and just gave up. I didn't make much money any of those years. I'm not even sure I owed taxes - in most cases I probably was due for a (tiny) refund. For the past several years I have worked on becoming more financially responsible and have regularly paid my taxes on time. I tend to forget about those years but when I do think about them I'm concerned. I'm just not sure what steps to take to resolve this. I'm not even sure which years I did not file.

It seems the most logical thing to do is to contact the IRS directly, explain there were years when I did not file taxes and ask them what the next step is. However before I make myself that vulnerable to the IRS I'd like to have a better understanding of what to expect.

My expectation is that they will help me acquire the W-2s for those years and the forms for filing, and then set up a payment plan to repay fines and back taxes. But is there any chance of other consequences? Jail, criminal charges, garnished wages?

I know what I did was stupid and irresponsible. It's scary to open this up instead of ignoring it. I'd appreciate any advice in sorting it out.
posted by anonymous to Law & Government (26 answers total) 19 users marked this as a favorite
My advice is to contact a CPA with expertise in personal taxes and let them deal with the IRS. In my experience, it is very much worth it to have a pro on your side.

I never missed a year filing taxes, but one year I (filing for myself) made a mistake and the IRS came back telling me that I owed $14,000. After trying to deal with it myself, I went to a CPA who not only figured out that I really owed $400, but negotiated the necessary extensions and whatnot. More than worth his $100 fee. You don't want the IRS telling you what you owe them.
posted by Kriesa at 10:16 AM on March 1, 2014 [5 favorites]

Seriously! Talk to a CPA. I tried to handle this myself. I made a partial payment for taxes that I had owed before being found out by the IRS. This put me on their radar, and a few weeks later my bank account was frozen and my wages were garnished. This is after I sent them a $10,000 payment toward overdue taxes of $23,000 or so.

Find out what you owe first, and then base your decision on that. You'll need to have a plan. I have another friend who ended up owing lots of taxes for some years he was a contractor as well. When he contacted the IRS, he knew what he owed them and provided them with a payment plan that they accepted and he didn't run into any of the problems that I did. You will want some professional advice on this.
posted by Roger Dodger at 10:21 AM on March 1, 2014 [2 favorites]

On the off chance that paying a CPA isn't something you're wholly prepared to do, here's a way to find IRS offices.

If you go in person, they won't have your identifying information until and unless you decide to give it, so you should be able to feel a little more secure.

I'm not sure whether they require you to give your info before offering even general advice, but I'd think they wouldn't - perhaps someone more knowledgeable can weigh in.
posted by amtho at 10:27 AM on March 1, 2014

It is commendable that you want to do the right thing, but the IRS will not be on your side. Find a good CPA in your area that will help you with this. Ask about their fee up front.

According to the IRS FAQ regarding ammended tax returns you have three years. So your timeframe may be out of range for that. It isn't clear what you should do for years before 2010, but a CPA will be able to answer that for you.
posted by jeffamaphone at 10:28 AM on March 1, 2014

If you just didn't FILE taxes and don't OWE any taxes and it was that long ago, the IRS does not care. It's not "official" but after 7 years they stop caring. YMMV. Maybe it's a big deal if you plan on running for public office in the future.

States are different. California in particular is on the ball, but if you were in California, you'd have heard from them by now. IRS auditors in blue states with high taxes are surprisingly chill. They just want the money. In red states with low taxes, they are psychos and want to punish you.

Imagine this advice is from your dirtbag uncle or brother who seems kind of shady but always gets away with everything in the end (that's me). For peace of mind, consult a tax professional with "Enrolled Agent" status. Do not contact the IRS directly. Have someone else do your taxes from now on.
posted by BabeTheBlueOX at 10:57 AM on March 1, 2014 [2 favorites]

That long ago is of no concern. You are nowhere on their radar screen for those years if you have since been filing and receiving refunds. A failure to file penalty does not exist if you don't make enough money to file, so the simple act of not filing is not in and of itself going to raise flags. Even if you just didn't file because you just didn't file - it doesn't matter at this point anyway. Move on, they have.
posted by Gerard Sorme at 11:06 AM on March 1, 2014 [4 favorites]

agreed with the magic phrase "enrolled agent". I did not file for two years, mine fixed everything, I still use her for my taxes.
posted by kellyblah at 11:33 AM on March 1, 2014

Please ignore any advice to move on and forget about it, as well as incorrect claims that the years you failed to file are so long ago that this no longer matters. Tax law is a bitch, the government generally wants its money, and the courts have made some very unusual interpretations of statute of limitations when it comes to tax evasion and fraud.

The few times I've had to deal with the IRS, the customer service people have been remarkably kind and easygoing. If you have questions, call or stop in and ask. Get a CPA or someone similar to work with you if you decide to move forward; the comments above that their fees are worth it are true.
posted by NotMyselfRightNow at 11:38 AM on March 1, 2014 [9 favorites]

Forty years ago, in a year I owed no taxes, I did not file. The next year, like you, I just started right in again filing and have filed ever since. They know about it - it shows up on my Social Security statement every year, but they are not coming after me. I would just get on with my life.
posted by Hobgoblin at 11:45 AM on March 1, 2014 [1 favorite]

If you just didn't FILE taxes and don't OWE any taxes and it was that long ago, the IRS does not care. It's not "official" but after 7 years they stop caring.

I hate to call out a specific answer, but this is completely incorrect on at least 4 points. Sure, get a CPA if you want to. Here's the thing: If you are facing garnishment of wages and worse, you would know. There would be a pile of letters from the IRS in your mailbox.

They've probably seen everything, and they aren't the boogie-man of past years. Consider calling them and just asking what you need to do to get right on this. They know it's scary. They want to help.

The sooner you get help, the sooner you will feel better.
posted by Houstonian at 11:47 AM on March 1, 2014 [1 favorite]

You say you "didn't pay your taxes" but then you talk about W-2s and refunds, which is confusing. It sounds like your taxes did get paid when they were deducted from your paychecks, but you didn't file returns at the end of the tax year to square the estimated amounts deducted by your employer with the amount you actually wound up owing at the end of the year.

I did this for a few avoidant years, then when I later wanted to buy a house I needed to have the returns dealt with. I just filled out the 1040EZ forms for the years in question, mailed them in and came out ahead by a fair amount even after factoring in the late fees.
posted by contraption at 11:53 AM on March 1, 2014 [2 favorites]

Also: They can tell you exactly what you filed for each year. If you don't have your W-2s and other paperwork, that's ok because they can send you a computer printout with all the info. If you then make a mistake on your paperwork, they will correct it (even when it is in your favor!). And if you can't pay it all at once, they work out a payment plan with you.

You are going to feel so much better when this is behind you!
posted by Houstonian at 11:55 AM on March 1, 2014 [2 favorites]

You'll be fine. Just call the IRS and tell them what you've told us here. They'll let you know what years you are missing, and what the next steps are.

Worst case scenario, you owe some money, and can't pay in full right now? No big deal. Set up a monthly installment payment plan. It's dead simple to do.

And NO, they can't throw you in the slammer; and they can't seize any of your income or assets without going through a process that involves giving you multiple notices in the mail. You won't get your bank accounts frozen unless you willfully disregard their ample notifications.

As others have said, the "new" IRS is a much more mellow one than in days of yore. Don't be afraid of them.

You don't need a CPA at this point. Call the IRS first, and see what the deal is. You'll feel MUCH better once you start taking small steps to get this all sorted out.

A Former Tax Scofflaw
posted by nacho fries at 12:02 PM on March 1, 2014 [7 favorites]

Mod note: From the OP:
Contraption, you are correct and I misspoke. Taxes were deducted from my paychecks, I just didn't file returns.
posted by restless_nomad (staff) at 12:08 PM on March 1, 2014

You can get your Wage and Income Transcripts on the IRS website.

Use those, and Forms 1040 for the applicable year (also on the IRS site) to file your past year returns. If all you had was wage income and you withheld at least your tax liability (i.e. were expecting a refund), then you can do this yourself. It is past the statute of limitations to receive a refund, but you should file the returns anyway. If you find you have a tax liability for any year, you may want to see a CPA/EA but you can also file the returns, wait for the IRS to send a notice with the applicable penalties, etc, and either pay that or see an advisor at that time.

The IRS is actually really easy to deal with, so don't worry. If you were due a refund, you won't owe any penalties or interest (you just forfeit your refund because you filed past the three-year statute of limitations).

If you live in a state with income tax, you will want to take care of that as well; they may have different rules.
posted by melissasaurus at 1:06 PM on March 1, 2014 [2 favorites]

Also: if taxes were deducted from your paychecks, and your employer paid/reported those monies to the IRS, then the IRS should've sent you a bill *if* in fact you underpaid for those years. They send you a letter saying "Hey, you didn't file taxes, and based on our calculations, you owe x-amount, so cough it up." (They obviously just base that on a typical filing scenario where you take the standard deduction.)

If you didn't receive any type of letter like that, you probably won't be owing them anything.
posted by nacho fries at 1:08 PM on March 1, 2014 [1 favorite]

If you do not file, but you did not owe taxes that year, you will still owe a failure-to-file penalty.
posted by jgirl at 1:11 PM on March 1, 2014

No failure-to-file penalty if you don't owe any taxes.

From the IRS site:

There is no penalty for failure to file if you are due a refund. But, if you wait to file a return or otherwise claim a refund, you risk losing a refund altogether. An original return claiming a refund must be filed within 3 years of its due date for a refund to be allowed in most instances.
posted by nacho fries at 1:14 PM on March 1, 2014 [4 favorites]

Yeah, I sent in some 2010/2011 returns last year and got refunds, no questions asked.
posted by Standard Orange at 1:40 PM on March 1, 2014

IANA(Lawyer, Accountant,IRS worker) If you intentionally cheat the IRS out of money you owe, life is very difficult for some time. If you had low wages, and did not file for a refund, which might have been decent, since you made little, the IRS will be Officially Annoyed at you for not filing for some period of years. Your lack of filing was over 10 years ago, and you were likely owed a refund. I don't think you need a CPA. I would go to an IRS office and ask them about it. I have gotten the most accurate answers in person, not by phone. I think they'll tell you you're in no trouble. Not filing due to procrastination, depression, fear, etc., is not uncommon.
posted by theora55 at 7:40 PM on March 1, 2014

That long ago, you are definitely not getting any money back. If you've been filing since then and they have not contacted you, it is extremely unlikely that you owed them money for those years. Usually, if they have your current contact info, they will contact you if they've gotten your W-2s from your employer but you didn't file, if they think they were owed money.

The first thing you want is definitely the transcripts, both the Record of Account and the Wage and Income. The Record of Account will show you what years you filed and what years you didn't, any assessments they've made, that kind of thing. Wage and Income will give you the amounts from your W-2s and other similar forms, and you can then use that to calculate what your tax should have been those years if it differs from what they said.

If it turns out you do owe them, then talk to a CPA or EA about how to handle a payment plan and/or offer in compromise.
posted by Sequence at 7:55 PM on March 1, 2014

You can call the IRS helpline on (800) 876-1715 and, without giving them any personal information, just ask what needs to be done with a view to preparing overdue tax returns. It's possible they can give you some ideas on how to track down past income but if you feel that this is something you can't do by yourself then spending some money on an accountant is really not a bad idea at all.
posted by h00py at 5:44 AM on March 2, 2014

If you owed them money (or they *thought* you owed them money) they would have garnished your wages by now... ask me how I know! It's too bad you didn't file, because you probably would have gotten a return. If you still have your W-2s, etc., from those years, you could try and fill out the forms and make sure you didn't owe, if it will ease your mind. But I wouldn't worry about it.
posted by mskyle at 6:16 AM on March 2, 2014

Ten years ago? If it was me I would forget about it entirely. You probably lost out on some refund money. I've always heard what nacho fries said--you don't have to file if you don't owe.

If it is really bugging you, I'd talk to a CPA, or maybe the anon IRS helpline. I bet neither of them can tell you much without details, but a CPA could give you "here's what I'd do if I were you" advice and the IRS advisor probably won't.
posted by mattu at 7:14 AM on March 2, 2014

FYI the IRS's penalties and interest rates are really very reasonable. In the unlikely (from what you've described) scenario where you do owe them money you shouldn't be afraid of this. They are way more reasonable than your average credit card.
posted by jeffamaphone at 11:14 AM on March 2, 2014 [1 favorite]

The IRS is actually super helpful and nice* about these sorts of situations. Just call their customer service number and explain to them what you explained to us and they'll help you figure out what to do next (probably request your tax record for each year to find the missing years).

*Note: I am a paranoid Libertarian hack who would vilify the IRS at the drop of a hat were there the slightest intellectually honest justification to do so, and even I can't find fault with their customer service for low-income individuals. The modern-day IRS prefers to direct its nastiness towards rich people and businesses who should have known better (this strategy has a much higher expected return than harassing poor people over small sums of money), so please consider the wealth/era context when evaluating any IRS horror stories you may have heard.
posted by Jacqueline at 1:12 PM on March 2, 2014

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