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This is my first post, and it has to do with 2 late tax returns I have yet to file. From tax years 2002 and 2003, I did not file my returns. I have filed my 2004 return (on time this year) but the previous two years remain unfiled. I prepared them both (at the same time as my 2004 return) but have been lazy about filing.

Before I do so, is there something special I should do? I realize I will be on the hook for penalties and such, but I'm lookign for the best way to correct my mistakes. The taxes involved are not substantial.

Thanks in advance for the advice...

Aaron
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At least for federal, penalties are based on the taxes due. Since your taxes due are not substantial, it limits the amount of penalties and interest.

Debra
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I have no expertise here, not even reading knowledge, but I would recommend sending the returns in, with the amount of tax due (if any), but state nothing to draw attention to them. For the federal returns, the IRS may later send you a bill for interest and penalties, but at least you will have the returns filed and penalties wouldn't continue to grow.

I might even suggest sending them registered, return receipt.

Maybe someone knowledgeable would suggest something different, but my opinion is that they should definitely be sent in sooner rather than later (i.e., put it on your calendar to mail them Monday, which would give the tax experts time to answer your question over the weekend, but not so long as to significantly affect penalties).

The IRS isn't going to break down your door and haul you off to prison when you are now making a good faith effort to come clean with them.
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From tax years 2002 and 2003, I did not file my returns. I have filed my 2004 return (on time this year) but the previous two years remain unfiled. I prepared them both (at the same time as my 2004 return) but have been lazy about filing.

Before I do so, is there something special I should do?


Just mail them, in separate envelopes, with checks for the tax balance due. You'll be billed for any penalty and interest due. And don't fret. I wouldn't have had a job for 25 years if everyone filed and paid on time.

Phil
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Thanks for the advice. I suppose it sounds too simple to me, but I will be mailing the returns on Monday, in separate envelopes, with the appropriate checks attached to each return.

Aaron
...who hopes he won't be carted off to jail over a couple hundred $$ in late taxes.
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...who hopes he won't be carted off to jail over a couple hundred $$ in late taxes.

You will not be carted off to jail for a couple of hundred dollars. You will receive a letter for each tax year from your state and the IRS for appropriate penalties and interest.

A relative pushed not filing to the point where an IRS agent showed up at her door after her bank account was attached. All that took was filing the returns and setting up a payment plan for the remaining amount of taxes due.

Make certain that you keep copies of the returns. Returns not filed in the appropriate tax year are more likely to be lost by the IRS.

Debra
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Aaron
...who hopes he won't be carted off to jail over a couple hundred $$ in late taxes.


IRS just wants your money, not your body. So don't fret. Pay up and be done with it.

However, if you do have a legitimate reason why you filed late, write a letter and see if you can get the penalties waived. It's not a red flag for an audit. Collections is totally separate from the audit group. I always figure the worst they can say is NO. So if you were ill, suffering from depression or something, write a letter and explain your reason for not filing after you get the bill. Pay the interest and request an abatement of the penalty.

Arleen


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Collections is totally separate from the audit group.

Not that it matters a lot nowadays, but in the old days we Collection folks got really peeved when called "Collections" people. Of course, thanks to the last reorg neither Collection nor Audit/Examination exists any more. Now it's likely that the OP would be dealing with the "Wage and Investment" people, where there's been a lot of blurring of the collection and audit roles, especially in areas like penalty administration where there always was supposed to be cross-functional uniformity.

Phil
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