Non-Filers: Does it make sense to file State Return before the IRS?

By
Services for Real Estate Pros with Tax Resolution Society LLC

As had been said in the previous blogs, the non-Filers are taxpayers who for some reasons did not file their tax returns for many years. Suppose that you are one of them and you receive a notice from the IRS to file your tax returns. What can you do? The purpose of these series of blogs is to lay out the processes of how to resolve the non -Filer’s tax issues.

Why you might decide to file the State Tax Return first?

Taxpayers need to recognize that ounce they receive a notice from the Internal Revenue Service to file their tax returns, it means the agency is about to collect its money. Most of non-Filers owed taxes to the Federal, State and Local governments for many years in the amounts of tens of thousands of dollars. In this situation the taxpayer has to design a plan of how to get the issue resolve. One point of the plan is to file the state return first because the IRS allows the taxes you paid to state government in the calculation of the reasonable collection potential (RCP).

The Impact on collection

From the date you have received the IRS notice, every communication between you and the IRS should be to find the best way to resolve your tax issue. Paying first the state taxes and use it against the federal collection is very important. But the taxpayers need to have a clear judgment if it makes sense in their particular situation. The back taxes problem is a case-by-case analysis and the taxpayers have the responsibility to understand correctly their own situation before starting the process.

Comments (1)

Kristin Johnston - REALTOR®
RE/MAX Platinum - Waukesha, WI
Giving Back With Each Home Sold!

Great information.  Thanks for sharing and enjoy your day!

Dec 05, 2021 06:52 AM