Unfiled Tax Returns in Virginia

Combatting the problem of unfiled tax returns has become a top priority for the IRS. Whether the failure to file is purposeful or inadvertent, the consequences can be harsh.

Unfiled tax returns and back taxes may result in a number of fines, penalties, and possible criminal charges. Taxpayers can file at any point in time, even if they have not done so for the last few years. However, the Internal Revenue Service (IRS) can request tax returns older than six years and failing to provide any documentation or proof can result in the IRS coming after the taxpayer by any means necessary.

Seeking tax relief from the IRS can be complicated, confusing, and terrifying. The repercussions from unfiled tax returns in Virginia may be severe, which is why consulting with a knowledgeable tax lawyer could help identify all available avenues that will look to bring the taxpayer into compliance with the IRS.

Common Types of Unfiled Tax Return Penalties in Virginia

There are a number of reasons why taxpayers do not file their tax returns on time, such as believing that not all records are available to file a return or simply not understanding the filing requirements. Nonetheless, it is all the same to the IRS.

A failure-to-file penalty is dependent on a taxpayer’s filing status, federal income tax withheld, and overall gross income. Once it has been established that the taxpayer is obligated to file U.S. taxes, a failure-to-file penalty can apply.

According to the Internal Revenue Service, tax returns that are due must be filed, regardless of whether the taxpayer can pay in full or not. A failure-to-file penalty can come into effect once a tax return is unfiled by the due date.

If a taxpayer files for a time extension, the penalty will not apply. Only if the individual does not pay at least 90 percent of the actual tax liability will the failure-to-file penalty be applicable.

In some instances, the government will find that the failure to file a tax return will rise to the level of tax evasion. Known as a felony crime, this charge can result in a sentenced jail term of five years and up. Tax evasion cases will likely require the assistance of a skilled lawyer.

The Role of Substitute Federal Returns

In some unfiled tax return cases, the IRS will automatically complete a Substitute Federal Return (SFR) for the taxpayer. This return may contain information such as:

  • W2s
  • 1099s
  • Forms received by one’s employer, bank, or other entities

Typically, the SFR will claim no dependents, one exemption, and the standard deduction. Because the SFR is completed by the IRS and not the taxpayer, there is a lack of control over what goes on the return.

If the taxpayer qualifies for more than one exemptions, has more dependents, or itemizes as opposed to claiming the standard deduction, an SFR may show a higher tax liability than what it would be if the taxpayer filed instead.

Skilled Tax Relief for Virginians

Handling the complexities of unfiled tax returns in Virginia on one’s own can be complicated. The IRS, being the aggressive entity that they are, can assess a variety of penalties or fines on a taxpayer for failing to file. Consulting with a tax professional today could help determine what legal options are available to help correct the situation.