If You Don't File Your Taxes, the IRS Can File Them for You

If you have been foolish enough not to file your annual taxes with the IRS, either for just one year or for years on end, you know deep in your heart that the government will catch up with you sooner or later. What you may not know is that the IRS has the power to file missing tax returns on your behalf, in what is known as a “substitute for returns.” Not only will you have to pay the taxes indicated, but penalties and interest as well.

A Substitute for Returns Can Only Be Filed if There's Sufficient Evidence

Not all individuals who fail to file their taxes are good candidates for a Substitute for Return. Essentially, the government must have enough information to estimate your income with a reasonable degree of accuracy. Here's some of the evidence the IRS can draw on:

• Statements or documents from your employer, showing how much you were paid in any given year
• Statements or documents from your clients (if you're self-employed as an independent contractor), also showing their payment history
• Your bank statements, which can be subpoenaed by the IRS

If you fly off the radar, the government will not have enough solid evidence at its disposal to file a Substitute for Returns on your behalf. Of course, this doesn't mean you're in the clear: the IRS can still assess your tax debt without the intermediate step of filing a Substitute for Return, and you'll be in an equal (or, possibly greater) amount of trouble.

Part of what makes the Substitute for Return such a potent weapon is that the IRS will not take all, or even any, of the deductions to which you would otherwise be entitled: this will be a “worst-case” tax return that assesses you the full tax debt, without any wiggle room. Imagine if you asked your eight-year-old son to fill out your annual return, rather than a seasoned accountant, and you'll have some idea of the tax debt you're liable to incur!

Have You Been Issued a Substitute for Return? You Need to Hire an Experienced Tax Lawyer

At the law firm of Travis W. Watkins, PC, we have years of experience dealing with Substitutes for Return. We can advise you on strategies for reducing your past tax debt and penalties. Call our Oklahoma tax experts today at 800-721-7054 for a free consultation!