How To Manage Unfiled Tax Returns Within Statute of Limitations?

An unfiled tax return is a return that has not been filed even though it was mandated by law. Filing any kind of outstanding tax return is actually in your best interest as you will be able to take advantage of the all exemptions and deductions that are available for you. The IRS might be able to assist you in setting up a payment agreement if you must file a return and owe a debt, but are unable to pay the full amount of tax owed there.

Are all unfiled tax returns eligible for a tax refund?

You may be eligible for a tax refund for the previously pending return. To be eligible for any refunds that are owing to you, your return must be filed within three years after the due date. Tax credits owed to you operate under the same principle. The good things is that if you’re still within that three-year timeframe, you still have time to benefit and get refunds.

However, understanding what is the statute of limitations on unfiled tax returns by the IRS is important. The IRS has the right to apply penalties for any year you failed to submit, but when looking into tax issues they hardly look back anything more than six years.

It doesn’t mean you need to pay all the penalties before the expiration of the six-year deadline. It can be disastrous to incur a failure-to-pay fine of 5% on your due taxes for every month your return is not filed.

Therefore, the basic line is that as you work to get current, be ready for the IRS to request that you submit forms for any delayed years that occurred during the previous six years. Be vigilant while filing taxes to avoid any future issues.