Many of our clients with unfiled returns don’t file the returns out of fear of the unknown. They don’t think they can pay, or they are worried about what the numbers on the paper say about them.
Unfiled returns cause much greater issues than unpaid taxes. In this instance, a wife received an IRS notice about a “Substitute For Return” (SFR) for several tax years, with a hefty tax bill.
Her husband was in charge of filing the return. She never asked questions. She just signed documents he put in front of her. She was now devasted. She had been suspecting that her husband had been hiding things from her. He had been acting very strangely whenever she brought up the business or money. He had been working late several nights a week.
She goes so far as to visit with a divorce lawyer. That lawyer sent her to us. We set up a meeting with her and her husband to discuss how to resolve the letter. After reviewing their transcripts, we find out that, in fact, the last three years of taxes weren’t filed, but also that the revenues reported to the IRS were incorrect. When we discussed these issues with the couple, the husband knew these facts, but couldn’t figure out how to solve them. He was so worried about the tax issues that he avoided his wife, his employees, and anyone involved in the issues.
We cleared up the problem in a month, filed returns, and got the penalties abated. We get a Christmas card every year from the happy couple.