Glossary

Unfiled Tax Returns

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Unfiled tax returns occur when taxpayers fail to submit their required federal or state income tax returns by the filing deadline. Failure to file can result in severe penalties and interest, as well as enforcement actions by the IRS, such as substitute returns, levies, and liens.

Taxpayers who have unfiled returns should act promptly to avoid escalating consequences, including:

Failure to File Penalty: Typically 5% of the unpaid tax per month, up to 25%.
Failure to Pay Penalty: Adds an additional penalty for taxes that remain unpaid.
Interest charges: Interest accrues on both the unpaid tax and penalties.

The IRS may file a Substitute for Return (SFR) if the taxpayer fails to file, which often results in a higher tax liability since deductions and credits are not considered. Filing past-due returns as soon as possible can help reduce penalties and prevent aggressive collection actions.

Recommendation

Form W-2G – Certain Gambling Winnings

Form W-2G is used to report gambling winnings to the IRS for tax purposes.

CP148 Notice

IRS CP148 is sent to taxpayers when there is a mismatch between the name or Social Security Number provided on the return and the IRS’s records.

Form 8949 – Sales and Other Dispositions of Capital Assets (applicable to cryptocurrency)

Understand the implications of Form 8949 for cryptocurrency transactions and tax reporting.

Form 8283 – Noncash Charitable Contributions (reiterated for detailed reporting)

Form 8283 – Noncash Charitable Contributions is essential for reporting noncash donations on tax returns.

IRS Form 8862: Information to Claim Earned Income Credit After Disallowance

IRS Form 8862 allows taxpayers to reclaim the Earned Income Tax Credit (EITC) after it was previously disallowed by the IRS.

Form 7004 – Application for Automatic Extension of Time to File Certain Business Income Tax Returns

Form 7004 is a vital tool for businesses seeking an extension to file certain tax returns.

CP523 Notice: Installment Agreement Defaulted

The IRS CP523 Notice informs taxpayers that their installment agreement is in default due to missed payments or other reasons, and outlines next steps to avoid collection actions.

CP23 Notice

The CP23 notice notifies taxpayers of discrepancies between their estimated tax payments reported and those in the IRS’s records, which may result in a balance due.

Form 2553 – Election by a Small Business Corporation (S-Corp Election)

Form 2553 – Election by a Small Business Corporation (S-Corp Election) allows businesses to elect S-Corp status for tax purposes.

CP02 Notice: Refund Processed

The IRS CP02 Notice confirms that a taxpayer’s refund has been processed, outlining any adjustments made to the return.