Legal Question in Tax Law in New Jersey

Re: Not filed taxes

The amount of penalties (and interest) that will be charged will depend on the amount of income and self-employment (SSI/FICA/FUTA/SUI)taxes that you owe for the periods involved.

If you go to the IRS, by your self or with a tax professional,the Service will work with you to prepare the necessary filings. Obviously, they will seek to collect as much as they can, as soon as they can, from you. Thus, you should be ready to prepare a financial statement for submission to the IRS.

If you have limited assets, you may be able to compromise the amount that you owe the IRS; at a minimum you will be able to work out a payment plan.

Because you were self-employed, it may be prudent for you to work with an accountant or tax attorney as the returns that you will need to prepare are more complicated than a simple 1040EZ.

Good luck.

If you have additional questions, you can email me at [email protected]

Re: Not filed taxes

This is the classic "nonfiler" situation. You are at risk of criminal prosecution for willful failure to file tax returns. IRS policy requires only $1,500 of tax per year over a period of three years to evidence a sufficient pattern of willfulness to warrant criminal prosecution. However, if you file your missing returns prior to the initiation of an IRS criminal investigation, you can escape prosecution under the IRS / Department of Justice "voluntary disclosure policy."

On the civil side, you will incur a 25% late filing penalty, plus interest. The IRS will work with you as to the amount owed, and will not demand that you pay more than you can afford. If necessary, you can even discharge the liabilities in bankruptcy after the appropriate time periods have run.

For more information on all of this, see my article on representing nonfilers, written for the Maryland Society of Accountants. It is in the articles section of my firm's website at www.bjhaynes.com.

Good luck