Past Years or Prior Tax Return, Back Taxes, Offers in Compromise


We are often asked the same questions by many clients about Filing Back Taxes. We decided to put together a little Frequently Asked Questions list that all have the same answer - YES. You see it by clicking here.



Past Years Tax Return

The world is getting smaller while the U.S. budget deficit is getting bigger. The Internal Revenue Service, in turn,  is getting smarter and more aggressive. It has recently reorganized its international tax division (NYT August 2010) and has also added over 2,000 new employees to work in the division which deals with expatriates. Recent changes include requiring U.S. Citizens  and permanent residents to prove they have filed U.S. tax returns no matter where they live in the world when renewing passports, applying to have a nonresident spouse live with them in the U.S., as well as other non tax related activities involving the U.S. government. If you are a green card holder and wish to renew or become a U.S. Citizen, there is a high chance that you will be required to prove you have filed your U.S. income tax return.

We are experts in preparing past years tax returns for our clients who have failed to file them while living abroad or in the U.S. We prepare the previous years returns in an efficient and speedy manner.  Very often due to the foreign tax credits and the foreign earned income exclusion the preparation of past years returns still does not result in any taxes owed. The IRS can only charge penalties or disallow the foreign earned income exclusion if taxes are owed for the particular tax year when the return is filed late. In other words - being proactive and filing past years return is in the taxpayers' own interest.

The IRS statute of limitations for assessing taxes never expires if you fail to file a tax return for any tax year. As a U.S. Citizeor permanent resident if your income exceeds a certain minimum amount (which varies for each calendar year) you must file a U.S. income tax return no matter where you live in the world and regardless of the fact you may be paying taxes in your residence country.

If you wish to discuss the ramifications and consequences of filing your past yet to be filed returns, and the tax law and rules that apply to your particular situation, feel free to contact us.

What is the simple procedure to have all of your past year returns prepared?
1. We will send you a simple questionnaire which you will fill out for all years in which you owe a tax return. You may always at any time ask questions by email, fax or telephone.
2. If if will be helpful to look at your IRS record, we will order a copy of your IRS official transcript for all years involved. With the transcript we will be able to tell you any income that has been recorded against your social security number, and any assessments made by the IRS or if those assessments have expired.
3. After reviewing your data, we will send you a fee quote for the preparation of all your past returns. If we are doing many years at once that quote will be reduced by the "bulk rate" discount.
4. After you approve our reasonable fee quote, we will prepare the returns. We will probably have questions which can be resolved by email, phone or fax. The returns will then be sent you for your signature and filing by email attachment, fax, or the delivery service of your choice. If you provide us with the data in good order the entire process can take as little as 1.5 to 2 weeks.
Please phone, email or fax us with questions and to discuss your special situation. Most of our clients who have made the move to file past years returns have found the process simpler than they initially imagined and once it is accomplished they have found a great pressure removed from their life.

Offer in Compromise

Those of our clients who end up owing monies to the IRS can enlist our help in the process known as Offer in Compromise. Offer in Compromise programs may allow you to settle the balance owed to IRS for pennies on the dollar. When you do owe back taxes, the amount owed increases at a fast pace due to interest and penalties and therefore can get very large compared with the original amount of tax owed.

In order to make an offer in compromise, you must first file tax returns for all of your past tax years; you cannot just rely on the amount assessed by the IRS. In order to file an Offer in Compromise and build a Payment Pan, the taxpayer presence in the U.S. is not required. Acting as your representative, we will submit an offer in Compromise to the IRS and develop a Payment Plan for you.