How serious is the situation if a person in the state of Tennessee who owns and manages their own business for over 8 years, hasn't paid any taxes in those 8 years?
How serious is the situation if a person in the state of Tennessee who owns and manages their own business for over 8 years, hasn't paid any taxes in those 8 years?
It depends on how much is owed the taxpayer or if the taxpayer is owed. Generally, if the IRS believes that a taxpayer is owed a refund, they won't come after them begging them to take their money, even though a penalty can be assessed for failing to file. If they believe that the person taxpayer owes money, and it is worth the cost of going after it, interest and penalties can be assesed, wages and certain income garnished or seized, property seized or forfeited in order to satisfy any tax assessments, etc., though the IRS will consider "offers in compromise" if you truly cannot pay, but their guidelines for accepting these are strict.
FYI, the statute of limitations doesn't start running until a return is filed.
Thanks for your reply. The person in question has stated that they probably owe the IRS hundreds of thousands of dollars (since they didn't file for 8 years, while bringing in a pretty comfortable income with their business), and that the IRS just haven't noticed yet. The problem is that this person is now going through a divorce (property, home, cars, etc all need to be divided) and is worried that the tax situation may be revealed. Is that a valid concern or can all of that be done through the courts without any red flags going off? Is $200,000+ owed enough to make the IRS want to pursue it?
If the IRS detects the obligation, oh yes....
The most likely ways divorce would result in the assets being detected are probably if the spouse who doesn't own the business seeks protection from any tax liability from the years of marriage by requesting innocent spouse relief from the IRS, or the transfer of assets triggers state or federal reporting laws which in turn triggers an investigation of the source of the assets.