Understanding the IRS’s Methods for Pursuing Back Tax Returns

Facing back tax returns can be a stressful and overwhelming experience for individuals and businesses. When taxpayers fail to file their tax returns or pay their taxes on time, the Internal Revenue Service (IRS) has various methods for pursuing compliance and ensuring that taxpayers fulfill their tax obligations. In this article, we’ll explore how the IRS goes after back tax returns, including the enforcement actions, penalties, and consequences that taxpayers may face for non-compliance.

The IRS’s Approach to Pursuing Back Tax Returns

The IRS employs a range of enforcement actions and strategies to pursue taxpayers who fail to file their tax returns or pay their taxes on time. These methods are designed to encourage compliance and deter tax evasion. Here are some common approaches the IRS uses to go after back tax returns:

  1. Automated Systems and Data Matching: The IRS utilizes sophisticated automated systems and data matching techniques to identify taxpayers who have failed to file tax returns or report income. These systems compare taxpayer information reported by third-party sources, such as employers, banks, and financial institutions, with the information reported on tax returns. Discrepancies or inconsistencies trigger further investigation by the IRS.
  2. Notices and Correspondence: Upon identifying taxpayers with delinquent tax returns or unpaid taxes, the IRS sends notices and correspondence to notify taxpayers of their outstanding tax obligations. These notices typically include instructions for resolving the issue, such as filing delinquent tax returns, paying overdue taxes, or contacting the IRS to discuss payment options.
  3. Substitute for Return (SFR): If a taxpayer fails to file a tax return despite repeated notices and reminders from the IRS, the IRS may prepare a Substitute for Return (SFR) on behalf of the taxpayer. An SFR is a tax return prepared by the IRS based on available information, such as income reported by third-party sources. The IRS uses the SFR to assess taxes, penalties, and interest owed by the taxpayer.
  4. Penalties and Interest: Taxpayers who fail to file tax returns or pay taxes on time may be subject to penalties and interest imposed by the IRS. Penalties for late filing or late payment can accrue over time and increase the amount owed by the taxpayer. Interest is also charged on unpaid taxes from the due date of the return until the date of payment.
  5. Levies and Seizures: In severe cases of non-compliance, the IRS may resort to more aggressive enforcement actions, such as levying bank accounts, wages, or other assets of the taxpayer. The IRS may also initiate asset seizures or liens against the taxpayer’s property to satisfy unpaid tax debts.

Consequences of Non-Compliance with Back Tax Returns

Failing to file tax returns or pay taxes on time can have serious consequences for taxpayers, including:

  1. Penalties: The IRS imposes various penalties for non-compliance, including penalties for late filing, late payment, failure to pay estimated taxes, and accuracy-related penalties for underreporting income or overstating deductions.
  2. Interest: Interest is charged on unpaid taxes from the due date of the return until the date of payment. The interest rate is determined by the IRS and is compounded daily, increasing the total amount owed by the taxpayer over time.
  3. Legal Actions: In extreme cases of non-compliance, the IRS may take legal actions against taxpayers, including wage garnishment, bank levies, property liens, or even criminal charges for tax evasion or fraud.
  4. Loss of Tax Benefits: Failing to file tax returns or report income accurately may result in the loss of tax benefits and credits that taxpayers may be eligible for, such as deductions, exemptions, or refundable credits.

How to Resolve Back Tax Returns

Resolving back tax returns requires proactive steps and cooperation with the IRS. Here are some steps taxpayers can take to address their back tax issues:

  1. File Delinquent Tax Returns: Start by filing any delinquent tax returns as soon as possible to bring your tax filings up to date. Gather all relevant documentation, such as income statements, expense records, and other tax documents needed to prepare and file your returns accurately.
  2. Pay Overdue Taxes: Pay any overdue taxes owed to the IRS to avoid further penalties and interest accrual. If you’re unable to pay the full amount owed, consider setting up an installment agreement with the IRS to pay off your tax debt over time.
  3. Communicate with the IRS: If you’re unable to pay your taxes in full or if you’re experiencing financial hardship, communicate with the IRS to discuss payment options and potential arrangements. The IRS may be willing to work with you to set up a payment plan or offer other relief options based on your financial situation.
  4. Seek Professional Assistance: If you’re unsure about how to resolve your back tax issues or if your tax situation is complex, consider seeking assistance from a tax professional or accountant who can provide guidance and support throughout the process.


Dealing with back tax returns can be a challenging and stressful process, but it’s essential to address these issues proactively to avoid further consequences and penalties. By understanding how the IRS goes after back tax returns, including its enforcement actions and consequences for non-compliance, taxpayers can take steps to resolve their tax issues and regain compliance with their tax obligations. If you’re facing back tax issues, don’t hesitate to seek assistance from a tax professional or accountant who can help you navigate the process and achieve a favorable resolution with the IRS.

 Learn more: Robert Hall & Associates | Los Angeles Tax Preparation & Consulting

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