What to Do if You Have Unfiled Tax Returns?

Not filing tax returns is a major mistake that will not only have short-term consequences but very long-term effects as well.
What Are Unfiled Tax Returns?

What Are Unfiled Tax Returns?

Unfiled tax returns are federal or state returns that were legally required but never submitted. At Wolf Tax, we see taxpayers fall behind for a variety of reasons:

  • Financial Hardship: Lack of funds to pay the resulting bill.
  • Documentation Gaps: Missing W-2s, 1099s, or poor bookkeeping.
  • Life Disruptions: Divorce, serious illness, or business closure.
  • Fear of Debt: The mistaken belief that not filing "hides" the income.

Note: The IRS receives copies of your income from employers and banks. Failing to file doesn't hide your income; it simply allows the IRS to calculate your tax without any of your eligible deductions.

  

How to Find Out if You Failed to File Taxes?

To verify whether or not you filed tax returns, you can do either of the following:

  • You can check the status of your tax returns and refunds by creating and/or signing into your IRS account.

  • You can contact the IRS and speak to a representative by calling 1-800-829-1040. Be prepared with your SSN, filing status, and any letters or notices the IRS has sent you.

Once you have determined that you need to file tax returns, the next step is to take action and do it, even if the IRS has filed a return on your behalf.

  

Do You Need Help Getting Your Income From the IRS?

At Wolf Tax, we don’t just file unfiled tax returns, we make sure they are filed accurately and strategically. Many taxpayers fall behind because they no longer have access to their income records or are unsure what was reported to the IRS. We help obtain missing W-2s, 1099s, wage and income transcripts, and other IRS records to ensure your returns match what the IRS already has on file. Accurate filing is critical, as errors or omissions can trigger audits, delay resolution options, or increase penalties. Our approach ensures your returns are completed the first time correctly and positioned to support payment plans, penalty relief, or other IRS resolution options.

  

What are my Rights as a Taxpayer?

Your rights as a Taxpayer include the right to file a tax return and pay the correct amount you owe. This is part of their fundamental rights under tax laws, ensuring they can fulfill their tax obligations accurately and fairly. In the U.S., the Taxpayer Bill of Rights includes the following relevant rights:

  1. The Right to Pay No More than the Correct Amount of Tax – Taxpayers are entitled to pay only the amount legally due, including interest and penalties, and to have the IRS properly apply all payments.

  2. The Right to File a Return – Taxpayers have the right to file a tax return to report their income, claim deductions, and calculate the correct amount of tax owed.

  3. The Right to Challenge the IRS’s Position and Be Heard—If taxpayers disagree with the IRS about the amount owed, they can provide additional documentation and appeal decisions.

Filing a tax return ensures compliance with tax laws and allows taxpayers to claim refunds, deductions, and credits they are entitled to.

How Many Years Can the IRS Go Back?

A common myth is that tax debt expires if you wait long enough. In reality:

  • No Statute of Limitations: If a return is never filed, the IRS can audit or assess that year indefinitely.
  • The 6-Year Rule: Generally, the IRS requires the last six years of filings to bring you into "Good Standing" for a payment plan.
  • The 10-Year Clock: The 10-year limit on IRS collections only starts after you file the return.
  

4 Essential Tips for Filing Unfiled Tax Returns

1. If you need to file returns, you first need to gather the following documents:

  • The last return you filed
  • Tax documents, such as W-2s, Social Security Income, 1099s, such as retirement, interest, and dividend income, and mortgage interest statements
    student loan interest, stock trades, gambling income/losses, debt cancellation, and more.
  • Qualifying Dependants
  • Business income and expenses, if you are self-employed or have a small business.

This is just a small list of required tax documents. If you receive any other year-end tax documents or have questions about expenses or deductions, make sure to contact a qualified tax preparer.

If you cannot find some of your tax documents, you may be able to obtain them from the IRS.

2. Determine if you are Filing on Your Own or Seeking a Professional Tax Preparer

You have the right to file taxes on your own or hire a qualified tax professional. Many taxpayers choose to prepare their returns themselves because the process can be very costly.

It is in a taxpayer's best interest to contact a qualified tax professional, whether or not they hire one. Even though it might cost more in the short term to use a tax professional, it may actually save you money. Tax professionals can help with document collection, expenses, deductions, and credits that you might not be aware of. Tax professionals will also prepare a more accurate return with a smaller likelihood of mistakes and potential audits.

3. File Your Returns Right Away

It's important to submit your tax return right away. Not filing could result in additional interest and penalties and prevent you from getting a refund.

In some cases, if an individual hasn't filed a return for several years, the IRS will prepare a substitute return on their behalf. This allows the IRS to determine taxes and initiate collection processes. However, substitute returns lack credits or deductions, potentially leading to a tax calculation that is significantly higher than what you actually owe. Filing an original return will likely be very beneficial.

Additionally, the IRS imposes penalties and interest based on the substitute return's calculations. These fees can accumulate rapidly, potentially increasing your total tax liability by up to 47.5%. Filing early helps you avoid these unnecessary expenses.

4. Claim Refunds Within Three Years

If you are entitled to a refund, then you will need to file your tax return within three years of the original filing deadline. If you file your tax return after this three-year deadline, your refund will expire. Outside of this three-year limit, the IRS cannot issue a refund to you, apply the refund to your outstanding balance, or apply the refund to a future estimated payment.

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What Happens If Taxes Aren't Filed?

Increased Costs to Your Balance Due

If you file late, the IRS can assess several types of penalties. If you don’t file and pay on time, you’ll likely receive a failure to file penalty and a failure to pay penalty. These figures include 5% of the unpaid tax amount for each month of a late return, up to a total of 25% of your tax liability.

The IRS also adds interest to the outstanding amount, including taxes due and any penalties assessed. This statutory rate has climbed over the past several years. Interest accrues on outstanding unpaid interest as well, so these costs can quickly mount.

There is no penalty for failure to file if the IRS owes you a refund.

Criminal Charges

Unfortunately, those who do not file a tax return on time may also face criminal charges. Penalties can include significant fines and even prison time, though this is uncommon.

The government has a limited amount of time in which it can file a criminal charge against you for tax evasion. If the IRS chooses to pursue charges, it must do so within 6 years of the tax return due date.

Other Problems For Not Filing Returns

  • Accruing interest

  • IRS substitute-for-return (SFR) assessments

  • Wage garnishments and bank levies

  • Tax liens

  • Loss of refunds

  

How Far Back Can the IRS Request Tax Returns?

How long can you avoid filing taxes? If you have old, unfiled tax returns, you might think that the state tax agency or the IRS has overlooked you, and you're in the clear. However, you could still be liable for taxes you owe, even 10 years later.

The IRS has no deadline for tax collection or for imposing penalties or interest for each year you fail to file your taxes. Once you file, the IRS has a 10-year period to collect the amount owed. State agencies have their own regulations and often have more time than the IRS to collect taxes.

Can I Get the Penalties Removed for Filing Late?

The IRS offers a program through which you can request that penalties be waived. This is called penalty abatement, which is the process of requesting and receiving forgiveness for specific penalties the IRS assesses.

Any taxpayer can request a penalty abatement, and those who have generally filed and paid on time can request a first-time abatement for the first year of payment or filing they missed.

All other penalty abatement requests vary, including the reasons for failure to file or pay and your previous track record as a taxpayer. To request it, you or your tax professional will:

  • Specify the penalty you want the agency to abate.
  • Explain the circumstances beyond your control that prevented you from timely filing and payment, such as a situation outside your control.
  • Submit any evidence that supports your case.

The IRS will consider the facts and issue a determination. If the agency rules in your favor, they’ll reduce your balance by the penalty amount plus any interest assessed against it.

  

Can a Tax Professional Help With Unfiled Returns and Penalties?

Absolutely, and in many cases, professional help is essential.

A qualified tax professional can:

  • Ensure returns are filed the first time

  • Reduce or eliminate penalties through abatement requests

  • Prevent overpayment caused by IRS estimates

  • Protect you during IRS communication

  • Structure filings to support payment plans or settlements

At Wolf Tax, unfiled returns are handled by experienced tax professionals who deal with the IRS on a daily basis.

Are There Companies That Handle IRS Negotiations for Unfiled Returns?

Yes, but not all firms are equal.

Wolf Tax handles both:

  1. Filing unfiled tax returns

  2. Negotiating directly with the IRS afterward

This includes:

  • Installment agreements

  • Currently Not Collectible (CNC) status

  • Penalty abatement

  • Offers in Compromise (when appropriate)

Filing is only step one. Resolution is where experience matters most.

How Do I Find a Local Tax Service Specializing in Late Tax Returns?

When choosing a firm, look for:

  • Experience with unfiled returns

  • IRS representation authority

  • Resolution-focused services

  • Transparent fees

  • Proven results

Wolf Tax serves clients nationwide and specializes in late filings and IRS problem resolution.

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