Like other Connecticut residents who haven’t file tax returns for several years, you may have had one bad year where you failed to file, but thereafter, it became a downward spiral. Granted, if you are due a refund, you are not obligated to file a return. However, you only have three years to do so in order to get the money the IRS owes you.
Perhaps the problem is that even if the IRS owed you a refund for one year, you owed the following years, so you know that you won’t see a penny of that refund anyway. Then, you just kept going for years not filing your tax returns because you fear you will end up owing a substantial amount of money in taxes, penalties and interest. That may be true, but eventually, the IRS will catch up with you.
Did you receive an Automated Substitution for Return?
The best course of action would be to initiate filing your missed tax returns on your own. However, your first indication that the problem is not going to go away may be the receipt of an Automated Substitution for Return along with a notice of tax liability from the IRS. An ASFR is a tax return filed on your behalf by the IRS. These returns only include your income — they do not take into account any dependents you have, deductions you can take or credits for which you qualify.
When you see the numbers for the amount you owe, it will most likely cause you some stress and anxiety. Fortunately, you do not have to accept the amount the IRS says you owe at this point. You can file the returns yourself including all deductions, credits and other items that may reduce your taxable income, and thus, your tax liability. It may even be possible to reduce penalties and interest.
You don’t have to deal with the IRS alone
At this point, what you don’t want to do is nothing. Once the IRS begins sending you notifications and ASFRs, you become subject to civil penalties, collection actions and possibly criminal charges depending on the circumstances. Whether you manage to get ahead of the IRS or you are already receiving notifications, now is the time to resolve this issue.
It may be possible to work out an agreement with the IRS that does not end with you owing larger sums than you should or with you ending up in prison. It would be in your best interests to work with an experienced tax attorney in an effort to protect your rights and interests.