Unfiled Tax Returns
Get Compliant. Avoid Criminal Exposure.

When the IRS files an SFR under IRC section 6020(b), they construct a return using only the income information reported by third parties (W-2s, 1099s, etc.). The SFR claims only the standard deduction and filing status single or married filing separately. It includes none of your itemized deductions, business expenses, dependents, or credits. The resulting tax assessment is almost always significantly higher than your actual liability. You have the right to file your own return to replace the SFR at any time, but the longer you wait, the harder it becomes to reconstruct records and claim deductions. SFR assessments also start the 10-year collection statute running, which affects your long-term resolution options.

The IRS generally requires the last six years of delinquent returns to bring you into compliance. This is based on IRS Policy Statement 5-133 (IRM 1.2.14.1.18), which provides that taxpayers with unfiled returns should file all returns due within the preceding six years. However, this is a guideline, not an absolute rule. Revenue officers have discretion to require more or fewer years depending on the circumstances. Factors that affect this include the total amount of tax due, whether SFR assessments exist, the taxpayer's overall compliance history, and the type of tax involved. We negotiate the filing requirements on your behalf to minimize unnecessary work and exposure.

Willful failure to file a tax return is a misdemeanor under IRC section 7203, punishable by up to one year in prison and a $25,000 fine for each year of non-filing. For criminal prosecution, the government must prove willfulness, meaning you intentionally and deliberately failed to file when you knew you had a legal obligation to do so. The IRS Criminal Investigation division refers a relatively small number of non-filer cases for prosecution each year, typically focusing on high-income individuals, repeat non-filers, and those who take affirmative steps to conceal income. Coming forward voluntarily before the IRS contacts you dramatically reduces criminal exposure.

The IRS voluntary disclosure practice (outlined in IRM 9.5.11.9) allows taxpayers who have willfully failed to comply with tax laws to come forward and disclose their non-compliance. While voluntary disclosure does not guarantee immunity from prosecution, it is a factor the IRS Criminal Investigation division considers when deciding whether to recommend charges. To qualify, the disclosure must be timely (before the IRS has initiated an investigation or examination), truthful, complete, and represent a good-faith effort to comply going forward. For taxpayers with significant criminal exposure, voluntary disclosure through an experienced tax attorney provides the strongest protection.

If you are owed a refund for a particular tax year, you must file the return within three years of the original due date to claim it. After three years, the refund expires permanently under IRC section 6511. The IRS estimates that billions of dollars in refunds go unclaimed each year because taxpayers fail to file. If you have not filed and are due refunds, time may be running out. Additionally, unfiled returns prevent you from claiming earned income credits, education credits, and other benefits that could result in substantial refunds. We analyze your income records for every unfiled year to determine whether you are owed refunds before they expire.