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The possible consequences of not filing a tax return

Many Georgia residents are likely concerned about the fiscal state of the nation. Mounting deficits and rising government spending are legitimate causes of concern, but a September 2014 U.S. Tax Court decision may serve as a reminder that not filing a tax return as a form of protest may have unfortunate consequences. When an individual fails to file a tax return, the IRS creates a return on their behalf using the wages and payment records in its possession. However, the IRS may not always compile a return in the way most advantageous to the taxpayer.

The case involved a taxpayer who sent the IRS a protest letter in place of a tax return in 2010. He was married with children, and the IRS created a return for him as a married person filing separately. This meant that he owed the IRS monies for unpaid taxes, interest and penalties, which would not have been imposed had the return used the deductions and allowances for a married individual filing a joint return.

The judge held that the IRS could not be held accountable for not creating the most advantageous return possible, and the man was told that he should have filed his return himself if if he wanted it structured a particular way. However, the news was not all bad for the taxpayer. The court elected not to impose a fine of up to $25,000 for using frivolous or groundless arguments to avoid paying taxes.

Receiving a notice from the IRS about monies owed can cause a great deal of stress and apprehension, and many people in this situation put off dealing with the matter for as long as possible. However, time is of the essence for those involved in a dispute with the IRS, and the intervention of an experienced tax attorney at an early stage could help to avoid sanctions such as a wage levy or bank account seizure.

Source: Forbes, "Whether You Like The Government Or Not, The IRS Expects Its Tax Revenue", Tony Nitti, September 16, 2014

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