How Many Years of Unfiled Tax Returns Does the IRS Require You to File?
If you have unfiled tax returns, the question of how far back you need to file can feel overwhelming. Do you have to dig up decades-old records? Or is there a more reasonable starting point?
The good news is that the IRS typically requires you to file only the past six years of unfiled tax returns. Let’s dive into why this rule exists, how it works, and what you need to know to get compliant and move forward.
The Six-Year Rule for Filing Unfiled Tax Returns
The general IRS policy, outlined in Policy Statement 5-133 contained in Section 1.2.1.6.18 of the Internal Revenue Manual, states that the IRS will not pursue enforcement for more than six years of unfiled returns unless they obtain managerial approval. This means that in most cases, you’ll only need to file the past six years to get back on track with your tax obligations.
For example:
- As I write this article, it’s December 2024, meaning you’d need to file returns for 2018 through 2023.
- Once 2024 tax returns are due, this six-year window will shift to 2019 through 2024.
While the IRS does have the authority to go back further—since the statute of limitations doesn’t begin running on unfiled returns—they generally stick to the six-year rule unless there are extenuating circumstances like fraud or significant unreported income.
Why Six Years?
The six-year rule strikes a balance for the IRS. It’s a manageable period that ensures taxpayers are compliant without burdening them with decades of unfiled returns. However, this doesn’t mean you’re off the hook for older years. If your situation involves potential fraud or other red flags, the IRS could decide to dig deeper.
Why Filing Is Critical
Filing unfiled tax returns isn’t just about avoiding IRS penalties—it’s also essential if you owe taxes and want to pursue relief options. Programs like installment agreements or offers in compromise require you to be in compliance with your filing obligations. This means having all required tax returns filed, which typically means the past six years.
Should You File Older Returns?
While the IRS generally won’t require returns older than six years, there may be strategic reasons to file older ones in some cases. For instance:
- If the IRS filed a substitute return (SFR) on your behalf, you could owe more than if you filed yourself. Filing an older return could correct the record and potentially lower your tax liability.
- If you are owed refunds for prior years, filing older returns could ensure you receive those refunds (note: the statute of limitations for claiming refunds is typically three years).
Consult a Tax Attorney
Every tax situation is unique, and the best course of action depends on your specific circumstances. A qualified tax attorney can help you:
- Assess which years you need to file.
- Navigate IRS policies.
- Develop a strategy to resolve your tax issues and stay compliant moving forward.
Take Action Today
If you’re overwhelmed by years of unfiled tax returns, remember that you don’t have to face it alone. Start by gathering records for the past six years and consulting with a tax professional to develop a plan. Filing those returns is the first step toward resolving your tax issues and regaining peace of mind.
For more guidance on tackling tax problems, feel free to reach out to me, Andrew Bosserman, founder of Boss Tax Law. I specialize in helping individuals and businesses resolve their tax controversies and get back on track.