If you have unfiled tax returns, you are not alone, and you are probably in less trouble than you think. The fix is the same for almost everyone: file the missing years before the IRS files them for you. Here is what the IRS does about unfiled years, and the step-by-step way out.
The short answer: File the missing returns before the IRS files them for you. We pull your IRS transcripts to see exactly what the IRS knows, prepare every missing federal and New York return, claim the deductions an IRS estimate leaves out, and set up a payment plan with penalty relief where it fits. Most people owe less than the IRS letter says.
Want us to look at your open years? Book a free 15-minute call. No obligation, and we quote a flat fee before any work starts.
What happens if you don't file
- Penalties grow every month. The failure-to-file penalty is 5% of the unpaid tax per month, up to 25%. The failure-to-pay penalty adds 0.5% per month, also capped at 25%. Interest runs on top.
- The IRS can file for you. It is called a Substitute for Return. The IRS uses your W-2s and 1099s, files you as single, and gives you no business expenses or credits. That bill is almost always higher than the real one.
- There is no time limit on an unfiled year. The usual three-year audit window only starts once a return is filed.
- Old refunds expire. If you were owed a refund, you generally have three years from the original due date to claim it. After that the money is gone for good.
How many years do you have to file?
Usually six. IRS policy generally treats a taxpayer as back in good standing once the last six years are filed, though the IRS can ask for more in some cases. We pull your IRS wage and income transcripts first, so we know exactly which years are missing and what the IRS already sees.
Where to start, by situation
| Your situation | What to do first |
|---|---|
| W-2 worker who skipped a year or two | Pull transcripts and file the missing years. Refunds from the last three years can still be claimed. |
| Self-employed with no books | Rebuild income and expenses from bank statements, then file. Pairs with our catch-up bookkeeping. |
| Got a "we filed a return for you" letter | File your own return for that year to replace the IRS estimate. This is usually the biggest money-saver. |
| Got a CP14 or CP2000 bill | Check the IRS math against your records before paying. Then pay, or set up a payment plan. |
How we fix it, step by step
- Free 15-minute call. Tell us which years are open and whether you have IRS or New York State letters.
- Pull transcripts. We see the same income records the IRS sees, so nothing gets missed.
- Rebuild the records. Self-employed or a small business owner? We reconstruct income and expenses from bank statements so you get the deductions you earned.
- File every missing year, federal and New York. Electronically where the IRS allows it, and by mail with tracking where it does not.
- Handle the balance. If you cannot pay in full, we help you apply for an IRS payment plan, which can often be set up online in minutes. We also check whether you qualify for penalty relief.
Here is a typical picture. A self-employed cleaner in Yonkers has three unfiled years. The IRS substitute return counts every 1099 dollar as pure profit: no supplies, no mileage, no phone, and it files her as single. Rebuilding her books from bank statements brings the taxable profit down to reality, and a payment plan turns the rest into a monthly number she can live with. The scary letter is the worst-case math, not the real math.
What we tell our clients
Do not wait for perfect records. Transcripts plus bank statements can rebuild most years, and an accurate return filed now beats a perfect return filed never. And never ignore a letter saying the IRS prepared a return for you. That one has a deadline, and replacing it with a real return is usually the single biggest money-saver in the whole process.
Who this is for
- W-2 workers who skipped a year or two and got a CP59 or CP2000 letter
- Self-employed people, gig workers and 1099 contractors who never filed
- Small business owners whose books fell behind
- Anyone who got a "we filed a return for you" letter from the IRS
We serve White Plains, Westchester County, the Bronx and NYC in person, and clients in all 50 states virtually. If the first letter you got was a bill, start with what to do about a CP14 notice.
Let us handle it
Behind on your taxes? Book a free 15-minute call or call (646) 917-7714. On the call we figure out which years are open and what filing them will take, and we quote a flat fee before starting. London's Tax Services, 75 South Broadway, 4th Floor, White Plains, NY 10601.
Want this handled for you?
Talk it through with a White Plains tax professional. Free, 15 minutes, no obligation.
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