Should I File My Tax Return if I Can’t Pay the Tax Owed?

I have taxpayers call or come into my Richardson, TX tax office asking if they should file their tax return if they believe they will owe the government but can’t pay the tax.  Although I understand their apprehension of filing the return, my response is always that they should file their tax return if they are required to file.  There are a number of reasons including the following:

  • There is a penalty of 5% per month up to a maximum of 25% for filing your tax return late (plus interest accruing on the penalty).
  • In addition to penalties for late filing and late payments, interest is accruing on both the tax itself and the penalties.
  • If your problem goes on long enough, like other tax debt issues, it can turn into a tax levy or Federal Tax Lien, both of which can be painful to taxpayers.
  • If you’re actually owed a refund, remember that you have only 3 years to request the refund or it can be lost.
  • The IRS has 10 years to collect tax debt but the clock does not begin until a return is filed and the tax is assessed.
  • If you don’t file, the IRS can file a tax return on your behalf and they won’t file it in a manner that benefits you, the taxpayer.
  • It is technically a crime not to file a tax return if you are required to do so.

What are the steps to resolving the tax debt?

As mentioned above, I would recommend that you file the return and get out in front of the problem.  In order to resolve the IRS Debt, the steps will include:

  • File the Tax Return in question.
  • Get in Tax Compliance –
    • File all tax return for the last 6 years.
    • Get in tax compliance for the current year:
      • Proper Withholding for W2 Employees
      • Proper Estimated Tax Payments if Self-Employed
      • Payroll Tax Deposits if the debt is for Payroll Tax
    • Choose the Appropriate Tax Resolution Option
      • Offers-In-Compromise
      • Installment Agreements
      • Currently Uncollectable Status

Do you Need Professional Help?

If you need help with filing your Federal Income Tax Return or any issue related to IRS tax debt, we can help you.  Please give me a call at (972) 821-1991 or  at  To learn more about us, visit our website at