5 Mistakes to Avoid When You Are Behind on Your Federal Tax Obligations

If you are behind on your federal tax obligations, you are not alone. However, this does not mitigate the risks you are facing. The IRS targets delinquent taxpayers through a variety of means, and if the IRS targets you in an audit or investigation, you could face substantial liability. Learn more from New Jersey tax audit lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group.

What Not to Do When You Owe the IRS

When you owe money (or when your business owes money) to the IRS, you need to be very careful to protect yourself. With this in mind, here are five potentially costly mistakes that you need to avoid:

1. Do Not Ignore Your Situation

Taxpayers who are behind on their federal filings or who have underpaid what they owe cannot afford to simply ignore the situation at hand. There are a couple of key reasons why.

First, the longer you wait to resolve the situation, the more penalties and interest you (or your business) will accrue. Second, if you knowingly fail to remedy a filing or payment violation, this can potentially transition your situation from a matter of civil noncompliance to a matter of criminal tax evasion or tax fraud.

2. Do Not Make a “Quiet Disclosure”

A “quiet disclosure” involves attempting to remedy past tax violations through a current tax filing. The IRS disfavors this approach, and, crucially, it does not provide any protection against the possibility of facing an IRS audit or criminal tax investigation.

3. Do Not Assume that Submitting a Delinquent or Amended Return is the Right Choice

While filing a delinquent or amended return is favored in comparison to a quiet disclosure, this doesn’t necessarily mean that filing a delinquent or amended return is the right thing to do. This also does not provide protection against facing IRS scrutiny, and it does not provide an opportunity to reduce the amount you currently owe.

4. Do Not Wait for the IRS to Contact You  

Some people who are behind on their federal tax obligations decide to take a wait-and-see approach. However, this approach is ill-advised for a variety of reasons. Not only will you continue to accrue interest and penalties, but once the IRS contacts you, key options for reducing your federal tax liability go off the table.

5. Do Not Attempt to Mislead the IRS

Finally, when you are behind on your federal tax obligations, you should not attempt to mislead the IRS. Not only is the IRS likely to find out that you are providing misleading information, but this can lead to federal criminal charges as well.

Request a Confidential Consultation with New Jersey Tax Audit Lawyer Kevin E. Thorn

Are you behind on your federal tax obligations? If so, we encourage you to contact us promptly for more information. To request a confidential consultation with New Jersey tax audit lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group, please call 201-842-7696 or contact us online today.