In other articles we have discussed the multiple options of resolving tax debt. However, one of the key requirements in doing most of these programs is to first be compliant with the IRS. It is normally our first step here in helping clients resolve their tax issues. Compliance is a fun complicated word that is thrown around by the IRS and practitioners, but what it basically means is to be in good standing with your tax obligations, and to stay in good standing when that next thing becomes due.
Tax Compliance: Good standing
For the IRS, to be in good standing is to file on time and pay forward liabilities on time. Having a tax debt, or liability, does not make you non compliant. The IRS cares more about filing tax returns and paying future obligations, rather than catching up on back tax debt. Paying future could be in regards to quarterly estimated tax deposits, employer taxes such as 940 or 941, or your new upcoming federal tax return bill. We will discuss all of these future payment obligations in a different article. The focus of this article is about tax filings.
Back Tax Filings
Lets say you are missing 20 years of tax returns, should you file them all? NO!! You have lost your opportunity to claim a refund on anything older than three years, so those past refunds are gone. As far as liabilities go, the IRS cares about the last six years of returns being on file. If they suspected something older than that would generate a tax liability, the IRS would have already filed a substitute for return on your behalf and collect upon that SFR return. Beyond that, missing tax filings only need to be caught up for the last six years.
Future Tax Filings
Compliance never stops. It is the continuing of doing the right thing when it comes due. Here, every year an individual income tax return is due in April. That return has to be filed in order to remain compliant. This is also true with employer tax filing forms that are due annually or quarterly. Again, missing that deadline would jeopardize compliance with the IRS.
Once the last six years of tax returns have been filed and you are current with future obligations with the IRS, you have a green light to find tax relief. Without compliance, most doors with working with the IRS remain closed.
Not sure of your compliance or where to start? Give us a call 800-822-4122 to learn what the best first foot forward should be. We can help. www.taxdebtservices.com