Tax Controversy
Behind on Your Tax Returns? How to Get Current with the IRS and SCDOR
Missed one year or several? We find out what the IRS already has, prepare the missing federal and South Carolina returns, and sort out the balance after they are filed.
If you have a CP3219N, the IRS has prepared a return for you and you have 90 days to file your own return or petition the Tax Court; that period cannot be extended.
File the missing returns, even if you cannot pay. IRS policy is normally to enforce filing for not more than the last six years, so six years is usually the working target, though your own facts decide it. The failure-to-file penalty runs at ten times the rate of the failure-to-pay penalty, which is why filing comes first and payment arrangements come after.
How we handle it
Free consultation
We talk through which years are missing, what changed in those years, and whether you have received any IRS or SCDOR letters. It can be in person on James Island or virtual.
See what the IRS already has
With your authorization (Form 8821 or Form 2848) we pull your wage and income transcripts and account transcripts. They show the W-2s and 1099s reported for you and whether the IRS has already prepared a substitute return for any year.
Rebuild the records
Transcripts do not show business expenses, cash income or most deductions, so we rebuild those from bank statements and your own records. If a business's books are behind, that work comes first.
Prepare and file federal and South Carolina returns
We prepare each missing year from the records, federal and state, and file them. Where the IRS has filed a substitute return, your own return replaces its numbers with the deductions it left out.
Deal with the balance and get current
Once the returns are filed we know the real figure. We then work through payment in full, a Simple Payment Plan or other installment agreement, an offer in compromise or Currently Not Collectible status, request penalty relief where the facts support it, and set up this year's estimates so it does not happen again.
What to have ready
- Any IRS or SCDOR letters you have received, opened or not
- Your last filed return
- Whatever W-2s, 1099s and 1098s you still have for the missing years
- Bank and credit card statements for the missing years
- Business income and expense records, or bookkeeping software access
- Records of any estimated tax payments made
- Major life changes in those years: marriage, divorce, dependents, a home bought or sold
- Your IRS Online Account and MyDORWAY logins, if you have them
Please don’t send tax documents or Social Security numbers through the website form. Bring them to the consultation. More in documents to bring to your CPA.
How many years you actually need to file
IRS Policy Statement 5-133 (IRM 1.2.1.6.18) says that delinquency enforcement normally covers not more than six years, and going further back needs managerial approval. In practice, the last six years are usually what brings you into compliance. It is a policy, not a statute of limitations: where no return was filed, federal law lets the IRS assess the tax at any time (IRC section 6501(c)(3)), and the IRS can still ask for older years.
What happens if you wait
The IRS may file for you
If you do not file, the IRS can prepare a substitute for return from the income reported to it. It might not give you credit for deductions and exemptions you are entitled to, so the tax it proposes is often higher than what you owe. It comes with a CP3219N Notice of Deficiency and a 90-day window.
Penalties and interest keep building
| Penalty | Rate | Maximum |
|---|---|---|
| Failure to file | 5% of unpaid tax per month or part month | 25% |
| Failure to pay | 0.5% of unpaid tax per month or part month | 25% |
| Both in the same month | Failure-to-file is reduced by the failure-to-pay amount | Failure-to-file stops after 5 months; failure-to-pay keeps running |
Refunds expire
If a missing year would have produced a refund, you must file within 3 years of the return's due date to claim it, and the same limit applies to credits such as the Earned Income Credit. After that, the refund is lost. The IRS can also hold current refunds while past-due returns are outstanding.
The South Carolina side
South Carolina residents who must file a federal return usually must file a South Carolina return too, so unfiled federal years normally mean unfiled state years. South Carolina's own penalties mirror the federal ones: 5% per month up to 25% for failing to file and 0.5% per month up to 25% for failing to pay (S.C. Code section 12-54-43). The usual 36-month limit on state assessments does not apply when no return was filed. SCDOR also offers payment plans once the returns are in.
Paying what you owe after you file
- Simple Payment Plan: for individuals who owe $50,000 or less in combined tax, penalties and interest, paid in full by the collection statute expiration date. All required returns must be filed first.
- Offer in compromise: settling for less than the full balance, based on your income, expenses and asset equity. Also requires all returns filed and required estimated payments made.
- Currently Not Collectible: a temporary pause in most collection for financial hardship. The debt is not forgiven, interest and penalties continue, a lien may be filed and refunds are applied to the balance.
- Penalty relief: the IRS's new Automatic Exemption from Penalty depends on three prior years of timely compliance, so it usually will not reach years that were unfiled. Reasonable-cause relief remains available where the facts support it.
When an attorney should lead
Most people with unfiled years are behind because of illness, a divorce, a death in the family, a business that went badly, or a first missed year that made the next one harder. That is a civil compliance problem, and it is our work. If IRS Criminal Investigation has contacted you, or income was deliberately hidden, speak to a tax attorney before anything is filed; we can prepare the returns under the attorney's direction. Americans abroad who did not realize they had to file should read our guide to the Streamlined Filing Compliance Procedures.
Sources
- IRS — IRM 1.2.1.6.18, Policy Statement 5-133 (Delinquent returns)
- IRS — Filing past due tax returns
- IRS — Failure to file penalty
- IRS — Failure to pay penalty
- IRS — Transcript types and ways to order them
- IRS — IRM 5.14.5, Simple Payment Plans (July 2026)
- IRS — Automatic Exemption from Penalty: what taxpayers should know
- SC Code Title 12 Chapter 54 (§§ 12-54-43, 12-54-85)
By Haigler CPA Group. Updated . The information on this site is general in nature and is not tax, legal, or accounting advice for your situation. Tax law changes and the right answer depends on facts we would need to review with you. Please speak with a qualified professional before acting on anything you read here.
This is for you if
- You have missed one or more years of federal or South Carolina returns.
- You have received a CP3219N or other letter about a return you did not file.
- You are self-employed or own a business and the records for those years are incomplete.
- You expect to owe and want to know the real number and your payment options.
- You think you may be owed refunds for recent years and want to claim them before they expire.
What sits outside this service
- Criminal tax matters. If IRS Criminal Investigation is involved, an attorney leads and we work alongside them.
- Representing you in U.S. Tax Court, which requires separate admission. We prepare the position and coordinate with counsel.
- Legal advice, including whether past conduct carries criminal exposure.
Start somewhere else if you need
Questions people ask about this
How many years of back tax returns do I have to file?
Under IRS Policy Statement 5-133, enforcement normally covers not more than the last six years, and going further back needs managerial approval. Six years is the usual target, but the IRS can ask for more, so we confirm against your transcripts and any letters before deciding.
Should I file my back taxes if I can't pay?
Yes. The failure-to-file penalty is 5% of the unpaid tax per month, up to 25%, while the failure-to-pay penalty is 0.5% per month. Filing stops the larger penalty, and payment plans, offers in compromise and Currently Not Collectible status all require the returns to be filed first.
Can I still get a refund for a year I never filed?
Only if you file within 3 years of that return's original due date. After that the refund, including refundable credits like the Earned Income Credit, is lost.
The IRS already filed a return for me. Do I still need to file?
Usually you should. A substitute for return is built from income reported to the IRS and might not include deductions and exemptions you are entitled to. Filing your own return gives the IRS the correct figures; watch the 90-day deadline on the CP3219N that comes with it.
Is not filing taxes a crime?
It can be. The IRS warns that repeatedly not filing can lead to additional penalties and criminal prosecution. If IRS Criminal Investigation has contacted you or income was deliberately hidden, speak to a tax attorney first; we work alongside counsel.
Do I have to catch up on South Carolina returns too?
Usually. SC residents who must file a federal return generally must file an SC return, and SC charges its own failure-to-file and failure-to-pay penalties. We prepare both together. For the dates that keep you current afterward, see the tax deadline calendar.
Keep reading
- Tax ControversyIRS audits, penalty abatement, appeals, and back-tax resolution.
- IRS & SCDOR lettersFind your notice number below, see what it means and which date matters, then let a licensed CPA deal with the IRS or SCDOR on your behalf.
- Streamlined and other delinquent filing pathsThere is no single route back. The Streamlined procedures require certifying that the failure was non-willful, and split into a Foreign version with no penalty and a Domestic version carrying a 5% penalty. Separate procedures exist for late FBARs and late information returns where income was properly reported. Which one fits is a facts question, not a preference.
- Documents to BringA checklist for the first conversation, so the second one is about answers.
- Quarterly Estimated Taxes: The September DeadlineThe third estimated tax payment of 2026 is due Tuesday, September 15. This is the one that decides how the year ends for most self-employed people and S corporation owners, because it is the last payment with enough time left to fix anything.
Talk to a tax expert
Tell us what you are dealing with and we will tell you how we would handle it.