There are 3 ways to clear up your tax situation with the IRS:
Quiet Disclosure: This is where you submit past year's tax returns in a way that will not raise red flags with the IRS. You are hoping that you are able to file the returns quietly to become compliant with the IRS and continue to stay compliant. You will still be hit with failure to file, failure to pay penalties as well as interest.
Correct Going Forward: This is where you make sure you file all your tax returns timely going forward. The Past stays in the Past. The hope is if you stay current the IRS will overlook the unfiled returns in the past. There is no guarantee of this, however! If the IRS does find you have unfiled tax returns, you will be assessed penalties and interest.
It is important to note that with the above situations, there is NO guarantee you will not be referred over for criminal activity. If this happens, not only will you be hit with the usual penalties and interest, you will be assessed criminal penalties as well as prosecuted.
Voluntary Disclosure: Here you knock on the IRS'S door and ask to come in. (Applying for Pre-Clearance) If the IRS says yes (Accepting you into the program) you will tell the IRS you have things you need to clear up.
The benefits of Voluntary Discolure are:
- You can negotiate terms with the IRS
- Can limit look back
- Limit penalties
- Avoid Criminal Referral
- If other issues are found, won't be prosecuted for them.
If you or someone you know has unfiled tax returns and is unsure of how to handle the situation, contact me at 702-469-9426 or candy@numbercruncherllc.tax. We will help you fix your IRS problem!
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