What should you do if you have not been filing income tax returns?
Attorney Tom Olsen: Well Charlie, I got a question from one of my listeners and the question was is that he had not filed tax returns for years and he wanted to know what he should do from here. What would be your recommendation for him?
Charlie Price: This is one of the most common problems I run across when I’m representing people with tax problems. And usually it starts innocently enough. There’s a number of reasons that I hear for not filing. Sometimes because they don’t have the documentations. They don’t get around the filing. Sometimes they’ll say that their tax repair died. I’ve heard that quite a bit. And then, probably the most common one though is that they know they’re not going to have enough money to pay the tax returns. Instead of risking, having the IRS garnish their way, doesn’t take to bank accounts. They just don’t file returns, assuming that that’s going to keep the IRS from actually doing that but in fact this is not true.
Now the IRS really does know that you made money because they get the reports from third-parties, employers, et cetera. It’s never a good practice to not file the returns because you can’t pay the taxes. Let me give you some reasons for these. First of all, not filing the tax return is potentially criminal versus not paying which is civil. What that means is, yes indeed, you can go to jail for not filing tax returns. I have a good friend, I’m not going to give a lot of information because many of you probably know him. A good guy. Almost went to jail for a year, for not paying his tax returns. It does happen. It’s very serious. You got to make sure you get those returns filed.
But beyond the problem with the criminal possibilities is there’s a huge fine for not filing your tax returns. It’s 5% of the tax due per month versus not filing which is half of a percent per month. Another problem is that one of my favorite ways of solving tax problems is filing bankruptcy. And I can wipe out a lot of tax it does by filing bankruptcy. But if you don’t file the returns, I can’t do it.
Attorney Tom Olsen: Well, some very good information Charlie. We appreciate that. I want to tell the listeners that you’re occasionally be on the radio show answering our tax questions. In the meantime, if you want to reach Attorney Charlie Price in Orlando, you can call him at 407-834-0090. Charlie, thanks for being on the radio show today.
Charlie Price: Hey thanks Tom. I appreciate it.