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An unfiled tax return occurs when an individual or business in Long Beach fails to file a tax return by the due date, including any extensions granted by the IRS or state tax authorities. Late filing refers to tax returns submitted after the deadline but without the intention to evade taxes. Typically, late filers incur penalties and interest on taxes owed, but these can be mitigated if the return is filed as soon as the oversight is discovered.
Non-filing, on the other hand, is when an individual or business completely fails to file a tax return despite having a filing obligation. Non-filing is viewed more severely by tax authorities, as it can be construed as an attempt to evade taxes. The penalties for non-filing are generally steeper than those for late filing and can lead to more serious legal consequences.
At the federal level, the IRS requires that all individuals who earn above a certain income threshold file a tax return. This threshold varies depending on filing status, age, and type of income. For example, in 2021, single filers under 65 needed to file if they earned $12,400 or more. Self-employed individuals are required to file if they earned $400 or more.
In California, the rules are similar but with different thresholds. The California Franchise Tax Board (FTB) mandates that residents, part-year residents, and non-residents who generate income from California sources meet the filing requirements based on their income levels, age, and filing status.
Misunderstanding Tax Obligations: Individuals, especially those newly self-employed or who have undergone significant life changes (such as marriage or divorce), might not realize that their new circumstances require them to file tax returns differently.
Complex Financial Situations: Business owners with fluctuating incomes or complex investment portfolios might miss filing if they are unaware of how certain transactions affect their tax liabilities.
Administrative Oversights: Both individuals and businesses might simply forget to file or assume erroneously that their accountant has handled it, especially if they are dealing with personal or professional upheavals.
Financial Hardship: In some cases, taxpayers might avoid filing because they cannot pay the taxes they owe, not realizing that filing a return without making a payment would result in fewer penalties compared to not filing at all.
Fear of Consequences: Some might avoid filing due to fear of discovering they owe significant back taxes, not understanding that failing to file exacerbates the problem.
Penalties: The IRS imposes a failure-to-file penalty, which accrues at 5% of the unpaid taxes for each month the tax return is late, up to a maximum of 25%. If the return is over 60 days late, the minimum penalty is either $435 or 100% of the unpaid tax (whichever is less as of 2021).
Interest: In addition to penalties, interest is charged on any unpaid tax from the due date of the return until the date the tax is paid in full. The interest rate is determined quarterly and is equivalent to the federal short-term rate plus 3%.
Tax Liens: A federal or state tax lien may be placed on your property as a legal claim against your assets. This is usually a consequence of a chronic failure to pay due taxes and effectively makes it difficult to sell your property or refinance it.
Tax Levies: More severe than liens, levies actually allow the IRS or state tax authority to seize your property to satisfy the tax debt. This can include garnishment of wages, taking money from your bank accounts, seizing and selling your vehicle(s), real estate, and other personal property.
Credit Scores: Tax liens, although no longer reported on credit scores, can still indirectly affect your creditworthiness through court judgments. Moreover, levies and unresolved tax debts can lead to reduced credit scores.
Loan Approvals: Having a history of unfiled returns can complicate the process of securing loans. Lenders often require recent tax returns to verify income and assess risk. Unfiled returns can result in loan denials or higher interest rates.
Our first step in assisting clients with unfiled tax returns is conducting a thorough review of their financial history and tax records. This professional assessment helps identify the years for which returns were not filed, calculate the accurate amount of taxes owed, and determine the applicable penalties and interest. This detailed evaluation serves as the foundation for all subsequent actions and ensures that we cover all bases in restoring compliance.
Tax Alliance specializes in preparing and filing past due tax returns. Our team of tax professionals uses the latest software and in-depth knowledge of both federal and California state tax laws to accurately prepare back tax returns. We handle everything from simple individual returns to complex business filings, ensuring that every possible tax advantage is utilized to minimize liabilities.
One of the most daunting aspects of dealing with unfiled returns is facing the IRS or the California Franchise Tax Board. Tax Alliance steps in as your advocate, handling all communications with tax authorities. Our negotiation expertise is crucial in arranging favorable outcomes such as installment agreements, offers in compromise, or penalty abatement. We strive to secure the best possible terms for our clients, significantly reducing their financial burden.
Tax Alliance's expertise is not just in general tax law; we have specific experience in navigating the intricacies of tax regulations as they apply to Long Beach residents. This local focus is vital, as it allows us to provide tailored advice that considers the unique economic and demographic factors influencing tax obligations in Long Beach. Whether it's dealing with state-specific deductions, credits, or understanding local business tax requirements, our team is equipped to guide Long Beach taxpayers through every step of the process.
Continuous monitoring of your tax situation is vital. Tax Alliance provides regular tax assessments to ensure that all potential issues are identified early before they escalate into significant problems. These assessments include reviewing your current financial statements, predicting future taxable income, and estimating upcoming tax liabilities. This proactive approach helps in adjusting withholdings and making estimated tax payments accurately, thus preventing the likelihood of future unfiled tax returns.
Tax planning is not a once-a-year activity; it requires ongoing attention, especially for those with complex financial situations or those running businesses. Tax Alliance offers scheduled tax planning sessions throughout the year, which are particularly beneficial in preparing for major financial decisions that could impact tax liabilities. These sessions provide an opportunity to strategize around deductions, credits, and other tax-saving measures tailored to the specific needs of Long Beach clients.
Tax Alliance’s suite of services extends beyond just handling immediate tax issues. We offer continuous tax compliance and planning services designed to keep our clients on track. These services include:
- Preparation of All Tax Forms: Ensuring that all necessary tax forms are prepared and filed correctly each year.
- Advice on Record-Keeping: Providing guidance on best practices for financial record-keeping which simplifies the process of preparing future tax returns.
- Updates on Tax Law Changes: Keeping clients informed about relevant changes in tax laws that might affect their tax situation, particularly those specific to California and Long Beach.
- Representation in Audits: Offering representation and support during audits, which can be a crucial service for those who have previously faced issues with unfiled taxes.
Don't let unfiled tax returns disrupt your financial stability and future opportunities. Take control of your tax situation today by reaching out to Tax Alliance for a free, comprehensive consultation. Our team of dedicated tax professionals is ready to assist you with any tax issues you might be facing and help you navigate the complexities of tax compliance with ease and confidence.
Contact Details:
- Phone: 1.800.987.3051
- Email: info@taxalliance.com
- Website: www.taxalliance.com
Take the first step towards resolving your tax issues and securing your financial future. Tax Alliance is here to provide you with professional guidance and support every step of the way. Reach out today, and let us help you turn your tax challenges into solutions.
Because of advancements in our technology, we are able to communicate with the IRS electronically, its as if we are in the same office! Faster service and more cost effective!
If you are not happy with our tax services within the initial 21 days, we will give you a 100% refund of services rendered, no questions asked!
You find it, we will match it! Tax Alliance will match and beat (by 10%) any competitive offer. Contact our office today and receive a free no obligation tax consultation.
Because of advancements in our technology, we are able to communicate with the IRS electronically, its as if we are in the same office! Faster service and more cost effective!
If you are not happy with our tax services within the initial 21 days, we will give you a 100% refund of services rendered, no questions asked! We help our clients nationwide!
You find it, we will match it! Tax Alliance will match and beat (by 10%) any competitive offer. Contact our office today and receive a free no obligation tax consultation.
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