Optima Tax Relief’s Chief Tax Officer and Lead Tax Attorney, Phil, answers another question from Reddit about getting back into tax compliance. In this case, the taxpayer hasn’t filed taxes in 10 years and was told by an enrolled agent that they likely only need to file the last six years to become current with the IRS. However, they’re wondering if they should wait 60 days until the next tax season so they won’t have to file their oldest return.
How the Six-Year Rule Works
The IRS typically requires taxpayers who are behind on filing to submit their most recent six years of tax returns. In this situation, the taxpayer estimates they owe about $30,000 in taxes, but with penalties and interest, the balance has grown to nearly $50,000. Waiting 60 days could potentially push the filing window forward and eliminate the need to file the oldest return.
Can You Wait? Yes. But Should You?
While it’s technically possible to wait, it may not always be the best move. For example, self-employed individuals may want to file older returns so their income is properly reported to the Social Security Administration, which can affect future retirement benefits.
The Risk of IRS Action
Another concern is that the IRS can file a Substitute for Return (SFR) on your behalf if you don’t file. These IRS-prepared returns exclude deductions and credits entirely, resulting in a larger tax bill. In some cases, a revenue officer may even request more than six years of returns if you had a filing requirement.
Waiting may seem tempting, but delaying can create more complications. Don’t wait—file your returns and start resolving the issue sooner rather than later.
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