Consequences of Not Filing Taxes
The IRS and Arizona Department of Revenue (ADOR) impose substantial penalties for non-filing. The failure-to-file penalty is 5% of unpaid taxes per month, capping at 25%, while interest compounds daily. For Arizona residents, ADOR applies additional state-specific penalties, potentially doubling your financial exposure.
Prolonged non-filing can lead to tax liens, bank levies, wage garnishments, and in extreme cases, criminal prosecution. Without taking action, your financial future, including loan approvals and housing opportunities, may be severely compromised.
First Steps to Take
Begin by gathering documentation for the unfiled years: W-2s, 1099s, and deduction records. While you may wonder, “How many returns should I file?” the IRS generally requires returns for the past six years, though this can vary depending on your situation. Request wage and income transcripts from the IRS if you’re missing records.
Arizona-Specific Considerations
Arizona residents must file state returns when they’ve earned income within the state and are required to file federally. ADOR’s collection procedures are often more aggressive than the IRS, with shorter timelines and stricter enforcement. The department can suspend professional licenses and business credentials for continued non-compliance, a serious concern for many Arizona professionals.
Legal Options and Solutions
For both federal and Arizona tax issues, consider these resolution options:
Installment Agreements: Structured payment plans with customized terms
Offer in Compromise: Potential to settle for less than the full amount owed
Penalty Abatement: Reduction of penalties based on reasonable cause
Currently Not Collectible Status: Temporary hardship relief from collection
How a Tax Attorney Can Help
A specialized tax attorney provides advantages for Arizona residents, including:
Professional representation before both IRS and ADOR officials
Strategic filing of past-due returns to maximize Arizona-specific exemptions
Protection from enforced collection actions
Navigation of complex state-federal tax interactions
Conclusion and Next Steps
Don’t let unfiled tax returns limit your options in Arizona. While facing up to years of unfiled taxes feels daunting, resolution is possible with proper guidance. If you’re wondering about the broader question of how many years you can file back taxes, we have resources for that too.
Remember that acting promptly can save you thousands in additional penalties and interest. For Arizona-specific guidance, consult with a qualified tax attorney who understands both federal and Arizona tax law. With professional assistance, you can address your tax situation and move forward with confidence.
Book a free consultation with a Guardian Tax Professional today to get clear answers to your unique situation.
