The Internal Revenue Service has a policy statement regarding the number of years the taxpayer must go back if they have not filed recent tax returns.
As a former IRS agent and teaching instructor with the IRS, it is important for taxpayers to know that IRS has a policy statement regarding the number of tax returns needed to satisfy IRS in cases where taxpayers have not filed for years.
The great blessing is that IRS does not require you to remember the year of your last filing nor are they gonna require 10, 20 or 30 years in some cases of filing back tax returns.
The Internal Revenue Service wants taxpayers back in the system and the IRS policy statement of five – 133 will require that the taxpayer file their last six years.
The Internal Revenue Service realizes that asking taxpayers for more years is fruitless. It is far better to get them back in the system back in compliance because at the end of the day it helps both the taxpayer and IRS.
What many people do not realize by not filing many more back years they loose Social Security benefits that would’ve been accumulating.
As people get older they realized they probably should-be filed all their tax returns to get the maximum benefits.
To apply for Social Security to receive it you must have worked a total of 40 corridor hours.
The other sad thing is that many cases these people were W-2 wage earners, having enough or sufficient withholding taken out that they would’ve had refunds.
The statute of limitation on a tax refund is three years,
Civil Cases, not criminal
Many taxpayers cases regarding not filing are not criminal in nature. They are civil cases only.
With that in mind, major dollar amount cases, the laundering of money or particularly crimes of fraud, the Internal Revenue Service can or may work a case a different way.
So what’s the next step if you decide to file back tax returns.
Most taxpayers do not have the records to file back tax returns.
For those who can simply go ahead and prepare the returns and send them in all at one time to the Internal Revenue Service. Do not be afraid to send all the tax returns and the IRS in the same envelope.
They are going to get there sooner or later and you’re not going to fool anybody as IRS has very copious records of everyone’s Social Security number, filing statuses, and their income for the past six years.
The Internal Revenue Service can provide wage and income transcripts for those who have lost records to help you reconstruct your tax returns.
By simply asking IRS for a tax transcript, they will provide for you the records you need as far as income to prepare your return. As far the expense that will be applied against your income you’re pretty much be on you.
However reconstructive standards can be used by tax professionals who know the system and can help you out in these matters.
Policy Statement 5-133
1. Delinquent returns—enforcement of filing requirements
2. Taxpayers failing to file tax returns due will be requested to prepare and file all such returns except in instances where there is an indication that the taxpayer’s failure to file the required return or returns was willful or if there is any other indication of fraud. All delinquent returns submitted by a taxpayer, whether upon his/her own initiative or at the request of a Service representative, will be accepted. However, if indications of willfulness or fraud exist, the special procedures for handling such returns must be followed.
3. Where it is determined that required returns have not been filed, the extent to which compliance for prior years will be enforced will be determined by reference to factors ensuring compliance and evenhanded administration of staffing and other Service resources.
4. Factors to be taken into account include, but are not limited to: prior history of noncompliance, existence of income from illegal sources, effect upon voluntary compliance, anticipated revenue, and collectibility, in relation to the time and effort required to determine tax due. Consideration will also be given any special circumstances existing in the case of a particular taxpayer, class of taxpayer, or industry, or which may be peculiar to the class of tax involved.
5. Normally, application of the above criteria will result in enforcement of delinquency procedures for not more than six (6) years.
Enforcement beyond such period will not be undertaken without prior managerial approval. Also, if delinquency procedures are not to be enforced for the full six-year period of delinquency, prior managerial approval mus t be secured.
important information: if you do not file your back tax returns the Internal Revenue Service can file for you under 6020 B of the Internal Revenue Code. IRS will make sure with this filing you pay the most amount of taxes allowed by law.