Back Taxes and Unfiled Returns: What Should You Handle First?

When someone has both unfiled tax returns and an existing IRS balance, it can be tempting to focus only on the amount owed. In many resolution situations, however, filing compliance is an important first step.

1. Identify the Missing Years

Determine which returns the IRS expects and which years have already been filed. IRS account and wage-and-income transcripts can help reconstruct the filing picture, although taxpayers should also gather their own records.

2. Prepare Accurate Returns

Third-party income records may not tell the entire story. Depending on the facts, legitimate deductions, credits, dependents, business expenses and other information may need to be documented and reported.

3. Determine the Actual Balance

Once required returns are addressed, the taxpayer can better understand the combined liability and collection situation.

4. Evaluate Resolution Options

Possible paths may include full payment, installment agreements, currently not collectible status or an Offer in Compromise when applicable. Eligibility depends on the facts and IRS requirements.

Urban AZ Financial Back-Tax Review

Urban AZ Financial helps taxpayers organize missing returns, understand IRS account information and evaluate appropriate compliance and resolution steps. No particular IRS outcome is guaranteed.