Remember those commercials by H&R Block where they emphatically stated: “Get Your Billions Back America.” Well several clients has posed the question, what does it really mean? Well, their advertisement states that about 1 in 5 taxpayers who prepare a return themselves “leave money on the table by not claiming all of the tax credits and deductions for which they qualify.” In our opinion however, we believe that getting part of your billions back was really a well intended marketing scheme in order for H&R to drum up new business in the preparation of old tax returns.
Pursuant to IRS rules you are only entitled to get a refund that’s up to three years old – this means that you can currently file back returns for 2015, 2014, and 2013 – if those returns yielded refunds – you would be entitled. However if you were supposed to get a refund for the 2012 or any prior year and are just filing your return now – you would not be entitled to your refund. (The 2013 return needs to be filed prior to April 15, 2017 to be refund entitled)
We often represent taxpayers who have not filed returns for several years and need to file their back returns. It is not uncommon for us to represent a client who may have been entitled to refunds for several years and ends up losing those refunds because they negligently failed to file. In one instance we recently represented a client who forewent over $50,000 in refunds over a 10 year period.
The IRS really only wants taxpayers to be “current and compliant.” If you are a current client of our firm you will often hear us preach the necessity of being current and compliant. “Current” means that you have filed all of your tax returns due, and “compliant” means that you either have proper withholding or are making estimated tax payments on a regular basis.
Now, if you don’t file a return and are due a refund, the IRS will not give you the benefit of a refund past the three year period. However, if you were to owe money and didn’t file, the IRS may file a return on your behalf called a “substitute return” or an “SFR.” The concept of an SFR is based off of the IRS computer which will calculate out tax due off of your Wage and Income Transcript to see whether you may owe tax. The computer will then take into account a cost-benefit-analysis whereby it will determine whether the cost of pursuing the outstanding liabilities, or taxes, is outweighed by benefit of capturing the liability due.
If you have outstanding returns that have not been filed contact our office to schedule a free consultation.