If a taxpayer has an obligation to file tax returns, (income or other) and fails to timely file without obtaining a valid extension then the taxpayer may face civil penalties for failure to file and failure to pay taxes. If the taxpayer has failed to file intentionally and with the intent of evading tax then the taxpayer faces potential criminal charges. If a taxpayer has multiple unfiled years, then he or she should retain counsel. Counsel should then do an appropriate interview with the client to determine the nature and amount of unreported income. The lawyer should also engage an accountant to prepare draft returns. Once the drat returns are prepared the lawyer should discuss a voluntary disclosure with the client depending on the amount, nature and source of the unreported income. Additional investigation may be required and further steps as well.
Answered on Jul 12th, 2011 at 12:52 PM