Optima Tax Relief’s Chief Tax Officer and Lead Tax Attorney, Phil, answers another tax question from Reddit: “I just received an IRS letter saying I owe $23,000 for 2019 and 2020 taxes I never filed. Has anyone successfully negotiated this down?”
How You Can Owe Taxes Without Filing
The IRS may have filed the returns on the taxpayer’s behalf using a Substitute for Return (SFR). When taxpayers fail to file, the IRS can create a return based on income information it has. The problem is these IRS-prepared returns usually don’t include deductions or credits, which can result in a much higher tax bill. As Phil often says, you generally don’t want the IRS filing your taxes for you.
Can the IRS Go Back That Far?
Yes. If the IRS believes you had income and a filing requirement, it can pursue those returns even several years later. In this case, 2019 and 2020 are still well within the IRS’s collection timeframe.
Your Options to Fix It
The first step is determining whether the $23,000 balance is accurate. Filing the correct returns—especially if the taxpayer was self-employed, had dependents, or qualified for credits—may reduce the amount owed. From there, options such as an installment agreement, currently not collectible status, or an offer in compromise may help resolve the debt depending on the taxpayer’s financial situation.
Many taxpayers successfully negotiate solutions with the IRS, and finding the best resolution starts with correcting the returns and understanding your options.
If you need tax help, contact us today for a Free Consultation