Tax filing season can last
all year long and it is a time of real suffering for some people. All the
advertisements about getting tax refunds and using the found money for lots of
things that one enjoys only makes things worse. For these people it is more
sleepless nights, sweaty palms and upset stomachs that can be triggered by the
most offhand remark. A coworker or friend mentions having gotten their juicy
tax refund early. Dizziness, depression, anxiety follow. These are the
hallmarks. This is the plight of the tax return non-filer. Like most of our
human problems the non-filer has put himself in a box he can't seem to break
out of. His dreams are about being detected and spending hard time in a federal
prison in an orange jumpsuit breaking big rocks into small rocks and small rocks
into sand. The real shame of all this is that barring a business life which
generates illegal income the dream is not even remotely related to the reality.
In fact, in the vast majority of cases, IRS is more anxious to have the
non-filer join the system then to spend their lives in a restless tax
purgatory. Most of the fears that a non-filer harbors are baseless. Of primary
concern may be criminal prosecution which is reserved for the most part to illegal behavior or for
those cases IRS had to use its less than abundant resources to detect. Coming
forth voluntarily is the best advice to avoid this part of the nightmare. IRS
maintains a voluntary disclosure policy that lawyers who advise in this area
should follow closely. In most cases no criminal involvement will result.
Secondly, can be the actual cost of coming forward. It is true that the IRS
code provides for interest and penalties, but no one goes to jail, loses
reputation and is held to community scorn for simply owing the IRS money. Do a
Google search of celebrities and politicians who have found themselves owing
tax bundles. What should come as relief to these non-filers is that the code
provides methods for paying back tax liabilities. These methods allow ordinary
life to continue while still satisfying IRS tax law compliance. Foremost among
these is the installment agreement which simply gives time, in some cases up to
10 years to pay off tax liabilities. Where payments are not possible, the code
also allows an Offer in Compromise to be made. This procedure allows taxpayers
to offer to pay an amount in exchange for being released from any unpaid
balance which can include tax, penalty and interest. Where the client has no
current funds or assets, the IRS can suspend collection activity and place the
taxpayer in a currently uncollectible status while the statute of limitations
on collection continues to run. In dire
cases, if certain other conditions are met, bankruptcy may also discharge
income taxes and allow a taxpayer a fresh start.
The point of all this is that
any tax filing season need not be torture for the non-filer. Many of their
worst nightmares will not materialize. The time to act is now before IRS makes
contact. Bringing tax clients back into the filing fold should be a priority
for lawyers as well as clients.
