Don't wait to file taxes
But delinquent returns aren't cause for panic
by Russ Merrick Special to the Acorn

It's tax time. Your family and friends are busy collecting and organizing their tax documents. Some of your friends received their refunds weeks ago. So why aren't you among them? Maybe it's been a while since you filed a tax return, and you're not sure what to do, where to turn for help or if you can find all your receipts and tax documents. If so, don't panic; there is help for you.

Volunteer to file delin

quent returns

Taking the time to file the missing tax returns is better than waiting for a letter from the IRS. Because IRS receives copies of all W-2s and 1099 forms, IRS usually will send a letter saying they have prepared a substitute return based on the information they have. You will have a limited time to respond before the tax is assessed. Trying to reconstruct information from two or three years past in a very short period of time could put you ina real time crunch.

On the other hand, there is a good chance the IRS might owe you money in the form of a refund. But if you wait too long to file, you risk losing your refund altogether. The three-year statute of limitations prohibits the IRS from issuing you a refund after that time with very limited exceptions.

Penalty abatement

Sometimes "things happen." If you do have a valid reason for not filing a tax return, it is possible that some of the penalties can be reduced. Generally, if the IRS owes you a refund, there are no penalties at all.

Scared to volunteer?

If the IRS decides to come looking for you, life can become very difficult and frequently embarrassing.

There is a chance that your employer might be requested to send part of your paycheck to the IRS instead of handing your paycheck to you. Your bank account could be frozen or even seized. A lien could be placed on your wages, retirement income or even your home. In the worst case, you could face criminal prosecution.

What if you owe money? An installment agreement may be a viable option. If you owe less than $25,000 and can pay the full amount within five years, you may be able to set up a monthly payment plan and make regular payments on an installment schedule.

What if you owe a lot of

money?

If you owe so much money that you will never be able to pay your tax liability, a compromise could be worked out where the IRS will accept less than you actually owe.

If the IRS accepts your offerincompromise your total tax liability, including interest and penalty, is considered paid in full.

An OIC is a mathematical formula, not an amnesty program. Professional assistance is strongly recommended when compromising a tax liability.

This list is not exhaustive nor is it meant to address every situation that may arise.

If you haven't filed your taxes in awhile, don't be afraid to ask for help. Your first step to solving these problems is to find an enrolled agent.

EAs are tax practitioners licensed by the federal government to represent taxpayers before the IRS for audits, collections and appeals.

They provide tax preparation, tax advice and tax planning services in addition to helping taxpayers resolve problems with the IRS.

Russ Merrick is an enrolled agent who works in Camarillo.