This is a simple question. If you fail to file your return and the IRS has income documents (1099s, etc), the IRS will file the return for you. This is called a Substitute for Return (SFR) and is based solely on data the IRS has from sources. Therefore, if the IRS prepares the SFR, it will not include any business expenses, additional exemptions or other deductions that you may be entitled to. The result is that your actual tax liability may be overstated.
Once the income tax is assessed the IRS will begin the collection process, which can include placing a levy on wages or bank accounts or filing a federal tax lien against your real or personal property.
Even if the IRS has already filed an SFR, you will still want to file your own return to make sure you take advantage of all the exemptions, credits, and deductions you are allowed. The IRS will generally adjust your account to reflect the correct figures.
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If you have a big problem filing old tax returns then we can help. As a CPA firm that specializes in filing old tax returns, we know what it takes to file them. You are probably ware that penalties and interest can be significant, but there are ways to minimize these issues.
But you need to make sure that you get the returns filed. We can always find a way not to do something and filing old tax returns work the same way. If you procrastinate then nobody wins (certainly not you).
When you consider the implications of filing old returns, you will notice that you are better offer getting them done soon, before the IRS does it for you. Nobody enjoys tax time and it is certainly not fun filing several years of old returns. But the IRS is not going away anytime soon!
