Filing your unfiled income tax returns with the IRS can be a very costly mistake, unless you clear the way first.
You should never file your late tax returns with the IRS. Why? Because you could fall into a trap.
Here is some solid advice.
If you've filed all your previous returns and don't owe any money, and you can full pay any balance shown on this return, then you can file it now without a problem.
If there are other years not filed and you owe on any of them, or you owe on past years, you should find out your current status with the IRS collection division before filing. You or your power of attorney should get your record of account for many prior years.
The record of account will show the charges and payments to each year. It will also show if you filed or the IRS filed a return for you. If any of the years indicate that you didn't file, the a return needs to be filed. But... WAIT... Not Yet.
If you are in an installment agreement for any taxes you owe to the IRS, having unfiled returns makes that agreement invalid! Make sure you are able to discuss how you will make payments to pay off all of the outstanding balances. The trick is to get all delinquent liability years included under one agreement. This will stop future collection action, assuming you file and pay your taxes, and make your monthly payment on time.
Calling the IRS will also determine if they are in the process of preparing a return for you. If so, they will have a special address for you to send the return to. This will prevent you from having to undo it later. Or worse than that, the return you now file may not be excepted.
So be prepared to discuss your current financial situation. You should have a current IRS form 433a filled out already.
Getting your record of account to verify what is under your social security number will not alert the IRS that you are delinquent. Knowing your current status with the IRS concerning your filings and payment history is essential.
When you are ready to file your unfiled returns and you are missing information, you can request a record of information sent to the IRS from third parties. This includes W-2'S, 1099'S, K-1'S, etc. You are also allowed to estimate amounts that you can't calculate. There is an art to preparing unfiled returns. Make sure you have help from a tax preparer experienced in this area. I have made corrections to many poorly prepared returns that would probably have caused an IRS audit.
In conclusion... Do not file any unfiled personal income tax returns without first requesting a record of account from the IRS and making sure that you understand what has been filed, if the IRS filed it, and how you are going to present your arguments for paying back the liability.
You probably want to consult an expert advisor before you take any action in thesematters.
