Though the current tax season is rapidly coming to a close, many Colorado residents may still have many concerns about their taxes. In some cases, these concerns can stem from unfiled tax returns associated with previous years. It is important that taxpayers understand that not filing their returns does not mean that they are no longer held accountable for their tax obligations. In fact, the IRS could take steps to file a return on a taxpayer’s behalf.
Before individuals start thinking that allowing the IRS to file a return would be an easy way out of filing their own taxes, they may want to keep in mind that the IRS does not take a forgiving approach to filing a taxpayer’s return. This means that the agency will not be looking for savings credits or deductions to allow the taxpayer to receive the most favorable outcome possible. Instead, the IRS will simply use the income and tax information received from employment forms.
Typically, when the IRS files a return, the taxpayer ends up owing the maximum amount of taxes and facing penalties for tax delinquency. If this happens, the taxpayer can still address the situation, including by:
- Filing a tax return to replace the substitute for return that the IRS filed
- Using the correct information for the replacement by ordering wage and income transcripts from the IRS
- Understanding that the IRS will more closely assess a replacement return after it has filed a substitute for return on someone’s behalf
Deciding to address delinquent tax returns can be overwhelming, which is why it is wise to have help. Sometimes not having filed returns in a few years could mean a considerable amount of owed taxes, high penalty fees and other consequences. It may be possible for Colorado residents facing this scenario to qualify for assistance programs that could help them pay their tax obligations over time, but it is important that such options are fully understood and applied for correctly. Fortunately, attorneys experienced in tax law could help.