There a lot of good reasons to get your back returns filed if you haven’t already. First reason is that it is the law. If you owe on a back return, you might save yourself some of the failure to file penalty by filing a return. Then there is the statute of limitations for the IRS to review a return. When you file a return, you start the clock ticking until the IRS can’t look at that year’s return. They can open a return for review for three years after it is filed or two years after the tax is paid, whichever is later (unless there is fraud involved but that is another post). If you don’t file a return, the IRS can review it forever. If they can review, they can audit. The IRS also requirement that all past returns be filed before they will work with you on an installment agreement or offer in compromise is a good reason to get tax compliant.
The best reason to get your back tax returns filed is that you might be due refunds. The catch is that you only have three years to get a past return filed and still get the refund. Wait longer than that, you lose your money.
So, returns for 2011 must be filed by April 15, 2015. The due date for 2011 returns was April 16, 2012. Adding three years makes this year’s due date of April 15, 2015 your target date. You can still file after that but not get your refund back.
The IRS has estimated that one million taxpayers haven’t filed their 2011 tax return and are due an estimated one billion dollars in refunds. That works out to a nationwide average of $698. In Kansas, there are about 11,600 taxpayers who could split up $10,421 in potential refund. ($667 average)
There are a lot of reasons to get your back taxes filed but the best motivation many be to get any refund to which you are entitled. Especially, if time is running out on your 2011 tax return. Don’t give the government your money because you didn’t file a return.