Unfiled Tax Returns: Get Back on Track with Nashville Tax Solutions

If there’s anything worse than having to pay taxes, it’s having to file tax returns. This endeavor is complex and confusing by itself, then add the fact that the “reward” for filing a tax return is often an unexpected tax bill, and it’s no wonder that many returns go unfiled.

Unfiled tax returns might not seem like a big deal, but they can potentially be just as bad as back taxes. Besides penalties, unfiled tax returns could potentially result in IRS collection enforcement actions and even jail time. The purpose of this blog post is to provide an overview of unfiled tax returns, including why they’re a problem and how Nashville Tax Solutions can help.

Unfiled Tax Returns

Understanding Unfiled Tax Returns

Understanding the Problem of Unfiled Tax Returns

Not everyone has to file a tax return with the IRS. As a general rule, you should file a tax return if you’re a U.S. citizen or resident alien and any of the following situations apply to you:

You want to receive a refundable tax credit or tax refund.
You earn an amount of income that exceeds the income threshold for your filing status (this can range from $5 to $32,300, depending on the tax year, your age, whether you’re a dependent, and your filing status).

Filing a tax return is optional in the first situation, but not in the second. The problem is that the IRS will sometimes assume you’re required to file a tax return even if you aren’t.

For example, let’s say for the 2024 tax year, you earned $50,000 in taxable income. You filed a tax return for that year and paid any applicable taxes owed. Then in 2025, you had $0 income and no other facts or circumstances required you to file a federal income tax return, so you didn’t file one.

The problem arises because the IRS may not know you weren’t required to file a tax return for 2025. Therefore, if the IRS doesn’t receive your tax return by the April 15 deadline (or they don’t receive a request for a filing extension), the IRS might assume you have an unfiled tax return for the 2025 tax year and aren’t reporting taxable income.

This can result in a surprise letter or notice from the IRS, such as a CP59 or a tax bill, because the IRS filed a tax return on your behalf (more on this later, and why it's a bad thing).

As for situations where you know you were supposed to file a return, but haven’t, past-due tax returns can cause stress and anxiety because you’re always wondering if and when the IRS is going to realize you didn’t file a return and what the consequences might be.

To make this uncertainty worse, it can take a long time before the IRS notifies you of the filing deficiency. By the time the IRS contacts you about one or more unfiled returns, enough time has passed to turn any modest penalty or outstanding tax balance into something much larger and harder to pay.

Unfiled tax returns can be problematic, but the sooner you deal with them, the easier these problems can be to fix.

Understanding Back Taxes

Why is it a Pressing Concern?

When you owe back taxes, it means you have unpaid taxes from previous years. This situation can occur for various reasons, such as missed filing deadlines or underpayment of taxes due. The longer these taxes remain unpaid, the more complicated and burdensome the situation can become.

So, why is owing back taxes a pressing issue? Most essentially, the IRS imposes interest and penalties on unpaid taxes, which can quickly add up, increasing the amount you owe substantially over time. This financial strain can impact your overall financial health and stability.

Are you in need of help with back taxes? Addressing this issue promptly is key. Seeking professional help can provide you with the necessary guidance and support to navigate this complex situation. Tax professionals at Nashville Tax Solutions can offer help filing back taxes, negotiating Installment Agreements, or even settling for less than what's owed if you qualify for programs like the Offer in Compromise.

Why Unfiled Tax Returns Are a Big Deal

Now that it’s clear how an unfiled tax return can pose problems, let’s take a closer look at the different problems that are possible from past-due tax returns.

Monetary Penalties

Unfiled tax returns often result in at least two types of penalties:

Failure-to-file penalty, which is 5% of the unpaid tax for each month the return is late, up to a maximum of 25%. If the tax return is more than 60 days late, the failure-to-file penalty is the lesser of either $510 or the full amount of the unpaid tax.
Failure-to-pay penalty, which is 0.5% of the unpaid tax for each month it remains unpaid. This penalty won’t exceed 25% of the back tax balance. This penalty applies to unpaid tax amounts, but will commonly apply along with the failure-to-file penalty.

Because of this, if both the failure-to-pay and failure-to-file penalties apply for the same month, the failure-to-file penalty gets reduced by the amount of the failure-to-pay penalty. Ultimately, however, these penalties can stack on top of each other and may get up to 50% of your tax liability.

There’s also interest that’ll be tacked on to any applicable penalties, further increasing the amount owed to the IRS. The agency also back dates interest on your tax debt to the original due date of the return.

Substitute for Return

A substitute for return (SFR) is a tax return the IRS files on your behalf. This isn’t as nice as it sounds because the IRS uses incomplete information and makes assumptions about your tax situation which usually results in larger tax bills or tax bills when you really should be getting a refund.

For instance, on an SFR, the IRS uses the filing statuses married filing separately or single, which are generally less advantageous than married filing jointly or head of household if you qualify. Additionally, the IRS doesn't put any dependents, business deductions, or tax credits on your return – that can inflate your tax liability significantly.

No Tax Refunds

Some tax benefits, such as tax credits or refund checks, are only possible if you file a tax return. So even if you don’t owe any money to Uncle Sam, you could be missing out on free money from the federal government.

You must also act promptly to request these benefits, as you have the later of two years from the date you paid a tax or three years from the tax return’s due date to file the return for the tax benefit.

Credit Hurdles

Many banks and other lending institutions won’t issue credit, like a home loan, unless you submit financial information. This information will normally include one or more years’ worth of past tax returns. Not having copies of tax returns from prior years may make it far more difficult to obtain credit.

IRS Enforcement Actions

Past-due tax returns can result in penalties and tax bills when the IRS files an SFR on your behalf. If you don’t immediately pay these balances when the IRS sends you notices or letters informing you about them, you can expect tax collection activities to begin. These can include tax liens and levies (including wage garnishment and having your bank account frozen).

Criminal Charges

Under Section 7203 of the Internal Revenue Code, an individual faces criminal liability for willfully failing to file a tax return. In practice, this often leads to a misdemeanor charge unless there was also an affirmative act to conceal or provide misleading information to the IRS.

If this affirmative act accompanies the intentional decision not to file a tax return, then more serious criminal sanctions are possible, such as being charged under Section 7201 of the Internal Revenue Code, which could be a felony.

Having Years of Unfiled Tax Returns Can Feel Overwhelming,
But It’s a Situation That Requires Immediate Attention.

Don’t hesitate to seek help if you need help with past due returns.

We help from compliance to resolution. Get in touch now!

How Nashville Tax Solutions Can Help With
Unfiled Tax Returns

A lot of bad stuff can happen with unfiled tax returns. The good news is that finding the right tax professional can reduce or prevent many of these negative consequences. Below are some of the benefits that come with hiring a tax pro for your unfiled tax return problems, such as Nashville Tax Solutions.

Information Gathering

One of the biggest hurdles to getting caught up with unfiled tax returns is getting the information needed to complete the returns. Nashville Tax Solutions will help identify the necessary documents, such as 1099s, W-2s, income statements, and invoices, necessary to complete past-due tax returns.

Explaining Your Tax Obligations

You’re not required to file a tax return in all situations. A tax pro can help you decide when this tax filing duty applies and, if so, what’s required of you to comply with this obligation. If you're not required to file but the IRS is asking you to file, a tax pro can help you reach out to the agency and explain why you don't need to file.

Communicating With the IRS

A tax professional can help you communicate with the IRS to effectively explain your situation. Perhaps they can explain why you weren’t required to file a tax return. Or if you were required to file, they can explain why the IRS should agree to penalty abatement because you’ve had to deal with a particular hardship.

Once you’re caught up on your missing returns, if it turns out you owe money to the IRS, Nashville Tax Solutions can help you negotiate a tax settlement or payment arrangement, such as a payment plan or offer in compromise (OIC).

Our 6-Step Plan

Resolving Back Taxes

Payment plans during financial distress can be a lifeline. Here's why:

Initial Discovery Call

The first step is to understand your unique situation. During this call, we discuss the specifics of your back tax issues. This conversation helps us to gauge the extent of your tax concerns and start formulating a plan.

01

Strategic Roadmap Planning

Based on our assessment, we develop a strategic plan to tackle your back taxes. This could involve setting up payment plans, negotiating with the IRS for reduced penalties, or exploring other resolution options like an Offer in Compromise, depending on what you qualify for.

02

Assessment and Evaluation

After the discovery call, we conduct a thorough assessment of your financial situation. This involves reviewing previous tax returns, current financial statements, and any correspondence from the IRS. This comprehensive evaluation allows us to identify the best course of action for your specific case.

03

Resolution, Support, and Follow-up

The final step is the resolution of your back tax issues permanently. Once resolved, we don’t just stop there. We provide guidance on how to stay compliant in the future and avoid similar problems. We also offer ongoing support for any further tax-related queries or needs you may have.

04

Final Implementation:

With a plan in place, we start the process of resolving your back taxes. This might include filing any unfiled returns, communicating with the IRS on your behalf, and setting up any agreed-upon payment plans or other arrangements.

05

Preparing and Filing Past-Due Tax Returns

When hiring Nashville Tax Solutions to file unfiled tax returns, you can expect the following services and assistance during this process:

An initial consultation where we examine your situation and assess the scope of your tax problem.
Help you identify and organize the necessary tax documents and information needed to file your tax return(s).
Prepare and file the missing tax returns and review and explain the information being provided to the IRS.
Handle any necessary IRS communications that may be required as part of the tax filing process.
Recommend the appropriate tax resolution options, if necessary. If you owe back taxes, we will help find the best resolution for your financial situation. This could involve setting up payment plans, reducing penalties, or exploiting other options like an Offer in Compromise, or Currently Not Collectible, depending on what you qualify for.
Resolution Implementation: If you require resolution services, we can get you into the program that fits your needs the best based on your qualifications. We will negotiate on your behalf.

06 Dealing with back taxes can feel overwhelming, but it's a situation that requires immediate attention.

Don't hesitate to seek help if you find yourself in this position. Get in touch now!

Our 5-Step Plan

Resolving Back Taxes

Payment plans during financial distress can be a lifeline. Here's why:

Initial Discovery Call

01

Strategic Roadmap Planning

02

Assessment and Evaluation

03

Resolution, Support, and Follow-up

04

Final Implementation:

05

“We understand how easy it is for tax filings to fall behind—and how quickly the stress can build once they do. Whether it’s one year or several, we’re here to help you get back on track without judgment or pressure. Let’s work together to bring order to the chaos and give you the confidence to move forward. You don’t have to do this alone.”

Christopher Bennett,

EA & Founder, Nashville Tax Solutions

Why Choose Nashville Tax Solutions for Your Unfiled Taxes?

Over Two Decades of Expertise

With over 20 years in the tax resolution industry, our seasoned professionals bring a wealth of knowledge and experience to tackle your back tax issues effectively.

Dedication to Client Satisfaction

Your peace of mind is our top priority. We are committed to resolving your tax issues with efficiency and thoroughness, ensuring a smooth and stress-free process.

Ongoing Support and Advice

Beyond resolving your immediate tax problems, we offer continued guidance to help you maintain a healthy tax status and avoid future complications.

Nationwide Reach

Operating from Florida, we combine our deep understanding of state-specific tax regulations with comprehensive knowledge of federal tax laws, providing solutions that cater to clients across the USA.

Personalized Tax Solutions

Recognizing the uniqueness of each tax situation, we offer custom-made services tailored to your needs, ensuring precise and empathetic handling of your tax concerns.

Simple and Transparent Communication

We place a high value on open communication, breaking down the complexities of your tax problems into easily understood terms and outlining our suggested solutions.

Unfiled Tax Return FAQs

Is it possible to get arrested or go to jail for not filing tax returns?

Yes, criminal charges for not filing tax returns (in addition to not paying taxes) are possible, although relatively rare. You'll only face criminal charges if the IRS believes you committed criminal tax fraud. The Department of Justice has to prove to the court that your failure to file was willful and not negligent. In most cases, this is difficult to prove. Many unfiled tax returns are the result of a misunderstanding or ignorance of the law, or there’s little to no hard evidence to prove the state of mind of the taxpayer when a return goes unfiled.

What if I’ve never filed a tax return?

In theory, the IRS can go back as far as it wants if you haven’t filed necessary tax returns. In practice, the IRS usually only goes back six years unless it suspects tax fraud or significant unreported tax liabilities. Also, the sooner you get caught up with your missing tax returns, the easier it’ll be to limit any financial penalties and start any applicable statute of limitations clocks that might work to your advantage.

Does being self-employed make a difference with unfiled tax returns?

It can, but it’s likely not a major difference. Because most self-employed taxpayers don’t have taxes automatically taken out of their pay, it’s possible that any financial penalties could be larger. A self-employed individual may also have to file additional forms (such as a Schedule C) when catching up with past-due tax returns.

What is the statute of limitations for unfiled tax returns?

There are none, although the IRS typically doesn’t penalize taxpayers for unfiled tax returns from more than six years ago. Despite this, many tax benefits, such as credits and refunds, can only be received after filing a tax return, and the deadline to do this is usually three years from the date the return was originally due or two years from the date the individual paid the tax, whichever is later.

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Unfiled Tax Returns: Get Back on Track with Nashville Tax Solutions