As a general rule, the IRS will not be interested in excuses you offer for not paying your taxes: you “forgot,” your accountant went missing, you sustained amnesia after a head injury and couldn't file on time, etc. However, the government may be sympathetic if you offer an honest explanation for your failure to file, such as a death in the family, a prolonged illness, or personal bankruptcy.
Do you have a legitimate excuse for not filing your taxes? Keep it short and sweet.
If you neglected to file your taxes in any given year, you will receive an official notice from the IRS demanding immediate payment, usually with the threat of penalties and interest. At this point, provided you have supporting evidence (medical records, bank statements, etc.), you can send a letter to the IRS with your “reasonable cause” for your failure to file. Some common reasonable causes include:
- A death in the family
- Loss of your job
- Divorce or bankruptcy
- A substance-abuse problem
- A gambling problem
- Your house went into foreclosure
- You were flat broke
A common mistake the typical taxpayer in this situation makes is writing a long, weepy letter recounting his personal problems. This kind of narrative makes for gripping afternoon talk shows, but it won't be of any interest to an IRS examiner, who will be buried underneath reams of paperwork and eager to clear his inbox as quickly as possible. You should make your point simply and clearly, and back it up with hard evidence. That is the best way to get the IRS to take your “reasonable cause” seriously.
Keep in mind, though, that even if the IRS accepts your explanation for not filing your taxes, the government will not excuse your back tax debt. The best you can hope for is the reduction, or elimination, of any penalties or interest charges. You still will have to pay your tax debt in full. (If you genuinely are unable to pay your back taxes, you may be eligible to make an Offer in Compromise. Only an experienced tax lawyer can tell you if this is a viable strategy.)
Let Travis Watkins, PC, Convey Your “Reasonable Cause” to the IRS
You may think a simple, heartfelt, handwritten note is the best way to get a cynical IRS revenue officer to accept your reason for not paying your taxes, but the fact is there's no substitute for a brisk, to-the-point, official letter from an experienced tax attorney.
Call the Oklahoma tax experts at Travis W. Watkins, PC today at 800-721-8054 with any questions or to request a free consultation!