What is a non-filer?

Individuals and organizations that have not filed tax returns for many years are often called non-filers. These individuals and organizations may have never filed. They may or may not be in compliance or follow-up action status.

Non-Filers should not assume that all the years still have a monitored filing requirement. This is very different from the legal requirement to file a tax return. We have outlined a practical approach to determining what must be filed to bring your filing into acceptable current compliance status.  If the thought of finding all that information is driving you nuts, you can download some of our worksheets.

Generally, the federal government will require tax returns from 1987 to the current year. Older years may still be required because of some outstanding compliance action. Those outstanding actions include balance due years or special monitoring activity.

The state governments requirements vary from state to state. A check with the state of residence will indicate if any actions is necessary. Often a state tax lien will appear on a credit report. Many states are contracting out the collection efforts. Individual tax compliance does not appear as strong in most of the states. State follow-up is strongest in the state of incorporation for corporations.

Often non-filers will find that returns have been filed for them. These are called Service Filed Returns (SFR). A taxpayer would have been given official notice of this action at the last known address. These SFR returns are often lacking the information a taxpayer would have included on a filed return. The tax calculation on a SFR return is usually the highest it could be, plus penalties and interest. The amount due on these returns, usually, can not be bankrupted. Even if the tax has been paid by the taxpayer or through offsets and levies, a return must be filed. If the tax is adjusted and a refund is due, the three year rule for refunds will apply. In our experience it takes from 60 to 120 days to process a filed return and adjust the tax on a SFR filed return.

Most states have a similar process, often call Notice of Proposed Assessments (NPA). While the title of the document may change the effect is the same as Internal Revenue Service. Lots of tax, penalty and interest due. The State of California has an two additional charges, demand penalty and a collection fee. Like the IRS most states will abate (forgive) penalties for good reasons.

Contacting the Internal Revenue Service

When a taxpayer contacts the IRS, they can expect to be asked to answer some important and probing questions

• What is your current address?
  
• What is your home and work telephone numbers?
  
• Where do you work?
  
• Where do you bank?
  
• If you owe money, are you prepared to pay the balance in full?

If you are told you have balances due, do not dispute them with the telephone representative. Find out what returns need to be filed and ask for data if you don't have any. IRS can provide you with copies of W-2 forms. Agree on a due date for filing or a request for more information. If you prepare the returns call IRS and tell them when you mailed the return. This will usually result in a hold on collection action. IRS may ask for an installment plan at this time.

A federal tax lien may have already been filed. If not already filed the IRS will often file a tax lien as part of a long term payment plan or when the balance is over $10,000. All tax liens will appear on your credit reports until released. These liens only affect your credit and any sales

If you need tax forms you can get them by calling 800 829-3676 or by downloading from the internet. Older years are only available from IRS. 800 FileTax has sources of federal forms from 1992 available for download.  Check our forms page, it has special links an other sources of forms.

Telephone Guidelines

• Be courteous, don't raise your voice. The telephone representative is giving you information they have on their computer screen.
  
• If the representative is unduly harsh or requires payments that you can not afford, politely ask to speak to a supervisor for a review of the actions taken.
  
• If you really can not stand the attitude, hang up and call later or the following day. There are some tough cookies at the IRS.
  
• Verify all due dates at the end of the conversation and write them down. Put the dates in you calendar, the IRS did!
  
• Three days before the due date call and request more time if needed.