QUESTION:
I haven’t filed my taxes in over ten years, but recently my bank account was levied and the notice I received showed that I owed a lot more money than I ever thought? How can the IRS assess taxes against me even though I never filed a return?
ANSWER:
The IRS cannot assess a tax against you without a return being filed. However, that doesn’t mean that if you don’t file your tax return, the IRS can’t bother you. There is a procedure where the IRS will prepare the tax return for you based on financial information they have on file such as the W2 your employer filed for your or any 1099’s that were issued to you. This return is called a Substitute Filed Return (SFR). Based on the SFR the IRS can assess taxes against you and collect through filing a Federal Tax Lien or worse, a levy. You will almost always come out better by filing your own tax return because most times, the IRS will not give you credit for all tax deductions that you qualify for. Therefore, I always recommend that my clients prepare and file tax returns for all years, even if there is an SFR because most of the time it will substantially lower your tax debt. On that note, I would like to remind everyone that the deadline for paying your 2006 taxes is April 17, 2007. I will be happy to talk with you about your situation and tell you how I can help. Your initial consultation is free and you will be under no obligation. The sooner you take action to solve your tax problem, the sooner you can rest easy and cease worrying about those taxes!