Have You Filed Your 2008 Return?

The failure to file a federal tax return can be costly - whether you end up owing more or missing out on a refund.

There are several reasons taxpayers don't file their taxes. Perhaps you didn't know you were required to file. Maybe, you just kept putting it off and simply forgot. Whatever the reason, it's best to file your return as soon as possible. If you need help, even with a late return, the IRS is ready to assist you.

Here are some things to consider:

Failure to File Penalty.

If you owe taxes, a delay in filing may result in a "failure to file" penalty, also known as the "late filing" penalty, and interest charges. The longer you delay, the larger these charges grow.

Losing Your Refund.

There is no penalty for failure to file if you are due a refund. However, you cannot obtain a refund without filing a tax return. If you wait too long to file, you may risk losing the refund altogether.

The deadline for claiming refunds is three years after the return due date.
EITC. Individuals who are entitled to the Earned Income Tax Credit must file their return to claim the credit even if they are not otherwise required to file.

Whether or not you must file a tax return will depend upon a number of factors, including your filing status, age, and gross income.

Tax Debt Help - Don't Let the IRS Determine Your Fate!

Generally, when you have not filed your returns, the Internal Revenue Service will take the information provided to them on Wage & Income Statements (income reported to them by your employer, bank, etc.) and force prepare your return and how much tax you might owe. These ”forced” filings are called “proposed assessments.”

If you get a letter from the IRS, and it says “Notice of Proposed Assessment” at the top of the letter, then you have just received a personal invitation from the IRS to file your back taxes.

Because people are free to arrange their financial affairs in such a way to take advantage of any tax benefits, the IRS may not know you specific tax situation or the deductions and credits you are eligible to claim. The only way for the IRS to really know how much you owe is for you to tell the IRS what your tax liability is. And the only way to do that is to file a tax return.When you haven’t filed a tax return, the IRS sometimes makes an educated guess as to what your tax liability might be.

The IRS does this in order to figure out if you might owe, and how much you might owe. For some of these situations, the IRS will send you a letter, called a Notice of Proposed Assessment. This is another way of saying “they’re guessing.”

The IRS has no way of knowing your real tax situation until you actually file a return. So many of these assessments will go away if you just file a tax return.

If you do not respond to the IRS’ notice of proposed assessment, the IRS may file a tax return on your behalf. This is called a Substitute for Return. In IRS jargon, this is called an “SFR.” An SFR is a formal way for the IRS to make an educated guess about how much taxes you might owe. The whole purpose of an SFR is to arrive at a definite dollar amount, so that the IRS can begin collection efforts. If the IRS has issued a proposed assessment, and you don’t respond, that assessment may become final.

Once the assessment becomes final, the IRS can now legally collect on the tax for a period of ten years.

The fastest and easiest way to remove an IRS assessment is to file a tax return. The IRS is legally obligated to accept your tax return instead of their Substitute for Return. That’s because your tax return has your signature on it, and that means you have agreed to a definite tax liability.

S. Raines, Sr. Financial Advisor/Tax Preparer