What to do if you haven't filed your return in years

Question: I just received a letter from the IRS informing me that my husband never filed our tax returns from 2004. When I asked my husband about it he said he forgot to file the last 4 years. What do I do? (Anonymous)

First, I would gather up all your tax documentation from the previous four years and file the returns ASAP. If you cannot locate your documents (i.e., 1099s, W-2s, etc.), you can call the IRS on the number provided on the letter. If you misplaced the letter, you can call toll free at 1-800-829-1040 to speak to an agent (NOTE: don't call on Mondays or Fridays - these are the busiest days for the IRS and you will most likely become frustrated trying to get a hold of a live person). If you explain to the agent that you lost your documentation and need to complete your returns for 2004, 2005, 2006 & 2007 they can send you a transmittal that provides all the appropriate numbers needed to have your returns completed. Once you have the information needed to complete the returns, I advise that you seek a qualified tax professional to assist you in preparing these returns in a reasonable amount of time.

I stress qualified because there are many people and companies out there that prepare returns, but are not really qualified to prepare them. Most taxpayers are not aware that the Internal Revenue Service does not restrict non-licensed professionals from preparing income tax returns. In other words, according to federal regulations a paid tax preparer does not have to be a certified public accountant or enrolled agent to prepare taxes. In April, 2006 the Government Accountability Office published the results of a study it conducted that indicates that large tax preparation service companies contribute to error rate. It was noted in the report that most of the preparers at these companies are unenrolled, inexperienced, and have little or no background in tax preparaton. Such companies as H& R Block and Jackson Hewitt do not require that their employees or franchise owners to have any prior experience in tax preparation or a college degree in accounting. To make a long story short, before you find a tax professional, make sure that they have the background necessary to prepare your returns - a six-week crash course offered by H&R Blockhead is not sufficient. It takes years of experience and education just to begin the ins and outs of the tax law.

The second thing I would do is not accept the answer "I forgot to file" for four consecutive years. There are two reasons why someone doesn't file a return: sheer laziness or because they are afraid they owe and can't pay the bill. If you and your husband owe money, you will be subject to interest and penalties which will make the tax bill much higher. The IRS will not accept the excuse that you were not involved in your household's finances and tax matters. This makes you equally as liable for the debt as he is. To make matters worse, the IRS allows you 3 years from filing deadline date to complete your returns and claim your refund - so if you were due a refund for 2004, you lost your right to claim any part of it.

What's done is done and you can't change the fact that your taxes haven't been filed. To prevent this from happening again, I would begin engaging in conversations to openly discuss all financial matters and tax matters with your husband. Perhaps you should take over some of the responsibilities or plan a weekly time slot to do things together. I found in almost half of the cases where taxes haven't been filed, there are usually a few credit card bills or loan payments that have slipped through the cracks too.