Let’s talk about a timeline that might seem a bit daunting but is crucial for regaining your footing with the IRS: the last six years. Yes, you read that right. To be in good standing with the IRS, you need to have filed your tax returns for the most recent six years. Six years—think about how much can happen in that time. Six years ago, I was just a junior at the United States Naval Academy, visiting Hawaii for the first time to meet my future in-laws, and even running a football across states for the Annual Army-Navy Football Game.
Time flies, and unfortunately, so can our awareness of our tax responsibilities.
Why Six Years? Why Compliance Matters?
The IRS requires that you file the last six years of tax returns to be considered in compliance. This isn’t just a random number; it’s a considered measure to ensure that taxpayers are reasonably up-to-date without being overwhelmed by the need to go back indefinitely.
Being in compliance is crucial for several reasons:
- Negotiating with the IRS: Whether you’re hoping to set up a payment plan, negotiate an Offer in Compromise, or any other arrangement to manage your tax debts, being in compliance is the first step. The IRS won’t deal with you if you’re not up-to-date.
- Maintaining Agreements: Any agreement reached with the IRS, such as an installment plan or an Offer in Compromise, requires you to stay in compliance as a condition. Failing to file subsequent returns or make required payments can void these agreements, putting you back to square one.
- Avoiding Further Penalties: Staying compliant helps you avoid additional fines and penalties that can accrue from failing to file or pay taxes due.
How to Achieve and Maintain Compliance
- File All Due Returns: Start by filing any and all outstanding returns from the past six years. This step alone can lift a huge weight off your shoulders and prevent new penalties from accumulating.
- Adjust Withholdings and Payments: If you’re employed, ensure enough taxes are being withheld from your paycheck. If you’re self-employed or own a business, make your estimated tax payments quarterly and ensure all payroll taxes are deposited on time.
- Plan for the Future: Once you’re caught up, stay caught up. File all future tax returns on time, every time. This not only keeps you in good standing with the IRS but also gives you peace of mind.
Need Help Getting There?
Getting back into compliance can feel like navigating a minefield, but you don’t have to do it alone. If you’re feeling overwhelmed by the thought of digging up old documents and filing multiple years of returns, an experienced tax professional can guide you through the process.
To help you get started, I’ve put together a comprehensive e-book that breaks down everything you need to know about regaining and maintaining IRS compliance. You can download it for free on my website. It’s packed with actionable advice and insights to help you manage your tax situation effectively.
Visit crushirsanxiety.com to get your free e-book today and start your journey back to compliance. Remember, tackling this now can save you from bigger headaches later. Let’s get those returns filed and keep your financial future secure!
Andrew Samaniego, EA, CTRC
Andrew Samaniego Tax Planning & Resolution
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