Unfiled Taxes & The Tax Law
If you are receiving past due tax return notices from either the IRS or the New York State Department of Taxation and Finance, you need to take the appropriate action to remedy your non-filer matter as quickly as possible.
There are legal strategies to obtain the best possible outcome as well as lower your tax bill. IRS and New York tax attorney Charles Rosselli addresses what the notices mean and what you need to do next to solve your non-filer matter under the best possible terms.
The IRS and New York State Department of Taxation and Finance are aggressively pursuing taxpayers with unfiled tax returns.
It is not a question of “IF.” It’s a question of “WHEN” the IRS or State will catch up with you.
Even if you have not been contacted or received a notice in some time, the IRS or State will not forget about you.
The federal government and NYS Tax Department have sophisticated computer systems that track taxpayers.
The failure to file a federal or New York State tax return is a crime and as such, you should counsel a tax attorney for advice before either speaking the taxing authorities or filing any past due tax returns.
We cover additional legal issues you need to be aware of in this article about unfiled taxes.
IRS Notices for Past Due Tax Returns
Here are the common notices for past due returns that you may receive if you have not filed your tax returns:
CP59 Notice
There is no record that you have filed your personal tax return(s).
Typically, this notice is generated when the IRS believes that you have a filing requirement based upon information that they have in their records ( W2s, 1099s, etc.).
CP63 Notice
The CP63 notice is the IRS is letting you know that you are not going to get your tax refund because you have not filed one or more of your income tax returns and based upon their records, they believe you owe tax.
This letter is often ( not always) received by taxpayers that are self employed in some capacity.
Typically, if you are self employed and receive 1099s, you are responsible for paying your estimated taxes every quarter.
If you have not, there is a good shot that you are going to owe the IRS.
CP259 Notice
The CP259 notice is the IRS is letting you know what tax period you need to file.
CP5151 Notice
The CP5151 NOTICE is a reminder notice from the IRS.
It is common for taxpayers with unfiled tax returns not to open their mail or misplace their notices so the IRS will send you follow up notices, such as the CP5151 Notice.
Do not take this notices lightly as ignoring notices shows a disregard of the tax laws ( see section: Unfiled Taxes and the Tax Law above).
CP516 Notice
The CP516 notice is a reminder notice.
Just in case you have not seen the other two notices, here’s another reminder from the IRS.
Usually, you will receive a notice every 30 days or so from the IRS.
CP518I Notice
The CP518I notice is the IRS final reminder notice that you have not filed your prior tax returns and they are letting you know that they are going to get more aggressive with their activity.
CP518B Notice
The CP518B notice the IRS final reminder notice that your BUSINESS has not filed your prior tax returns and they are letting you know that they are going to get more aggressive with their activity.
The reason why you should be concerned is that past due business tax return matters are often referred to Revenue Officers for enforcement.
You should expect a field visit at your home or workplace from the IRS.
The job of the Revenue Officer is to collect the tax liability, and possibly seize assets.
CP2566 Notice
The CP2566 notice is the IRS letting you know that it has not received your income tax return and the IRS is preparing a substitute for return for you.
The IRS will calculate the tax, penalty, and interest you owe based upon their records.
Your tax liability will usually be higher due to the fact that deductions and credits that you may be entitled to for tax year was not included in the calculation.
CP2566R Notice
The CP2366R notice is letting you know that the IRS has previously sent you, the CP63 notice ( see above) and you have not responded.
The IRS is going to hold your refund until you start filing your taxes and here’s a bill for what we think you owe.
The IRS is letting you know that you can accept their proposed assessment
In many cases, since the amount the IRS is proposed may be inflated or not in your best interests under the tax law,
You should seek counsel from tax attorney as to what will be the best strategy to lower your tax bill.
CP3219A Notice
The CP3219A notice is very important as it has a deadline to challenge the proposed assessment in Tax Court.
The IRS is indicating that the information that you provided in your income tax return is different from the income that was reported by other financial institutions.
Before you agree with the changes, disagree with the changes, or decide to go to Tax Court, you should have a tax lawyer review the notice to determine the best course of action.
LT3219B Notice
The LT3219B notice is Statutory Notice of Deficiency notifies you of the intent of the Internal Revenue Service to assess a tax deficiency against you and of your right to petition the U.S. Tax Court to dispute the proposed adjustments.
This notice has time deadline that affects your legal rights to challenge the assessment.
CP3219N Notice
The CP3219N Notice is a Notice of Deficiency (90-day letter).
Once you receive it, you have 90 days (150 days if live outside of the United States) from the date of the notice to file a petition with the Tax Court, if you want to challenge the proposed tax.
NYS Past Due Tax Return Notices
The New York State Department of Taxation and Finance is currently not sending past due tax return notices requesting that you file your unfiled state tax returns.
The New York State Department of Taxation and Finance does not send “gentle reminders”.
Rather, what the New York Tax Department will typically do is obtain information from the IRS pertaining to your income for a particular year or years and prepare an assessment based upon what they believe the NYS tax should be.
Typically, If you are a New York State resident, you must file Form IT-201 Resident Income Tax Return if you had to file a federal income tax return.
When you will then receive from the NYS Department of Taxation and Finance is a bill in the mail, called a New York State Notice and demand for payment of tax due.
The notice will state the current amount due; the assessment id; and by what date payment is due.
The amount due is usually an inflated amount as the assessment was created without any credits or deductions.
Further, interest and penalties are added to the assessment.
Do NOT Make These 5 Mistakes
Here are five (5) things you should NOT do if you have unfiled tax returns:
Speak to the IRS ( failing to file a federal tax return is a crime)
Speak to the New York State Department of Taxation and Finance (failing to file a NY tax return is a crime)
Bury your head in the sand and continue to procrastinate
Have a tax preparer or CPA just file your past due returns without seeking advice from a tax attorney ( see below)
Filing all your past due tax returns without a strategy ( can cost you tens of thousands of dollars)
Long Island tax lawyer Charles Rosselli of Tax Problem Law Center can help.
Your non-filer matter should be investigation and reviewed by a tax attorney prior to filing any tax returns so that the best strategy can be implemented as to what tax returns should be filed to achieve the best possible results and protect your interests.
Beside the possible criminal ramifications, we have seen mistakes by tax preparers as well as taxpayers utilizing the wrong strategy cost the unsuspecting non-filer anywhere between $5000 and $150,000.
In our opinion, that’s a big mistake.
We often see mistakes made that cost taxpayers tens of thousands of dollars that can be avoided.
It is our goal to protect your interests and solve your tax problems under the best possible terms under the tax laws.