Monday, April 21, 2008

What happns if you don't file your past due return with the IRS?

It's important to understand the ramification of not filing a past due returns and the steps that the IRS will take. Taxpayers who don't file a past due return or contact the IRS are subject to the following:

*Penalties and interest will be assessed and will increase the amount of the tax due.

*The IRS will file a substitute return for you. But this return is based only on information the IRS has from other sources. Thus , if the IRS prepares this substitute return, it will not include any additional exemptions or expenses you may be entitled to and may overstate your real tax liability.

*Once the tax is assessed the IRS will start the collection process, which can include placing a levy on wages or bank accounts or filing a federal lien against your property.

* Even if the IRS has already filed a substitute for return, it still makes sense for you to file your own return to make sure you take advantage of all the exemptions, credits, and deductions you are allowed. The IRS will generally adjust your account to reflect the correct figures.

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