The number one thing to remember concerning back taxes is this: Get your returns filed as soon as possible (ASAP), even if you can’t pay your balance due! Here’s why.
To repeat, the IRS will not consider working with you to obtain a settlement until you are in tax compliance. Tax compliance means that you must have filed all of your tax returns for the past six years. The IRS could demand tax returns even further back, but six years is usually sufficient.
If the returns are not filed, the IRS can do a Substitute for Return (SFR). An SFR is not a good idea for several reasons. It is far better to hire a tax professional to complete and file your returns and have that pro represent you before the IRS.
As mentioned earlier, there are settlement options such as an Installment Agreement (IA) and an Offer-in-Compromise (OIC) that can get you into tax compliance without bankrupting you or leave you financially devastated.
