You have to be compliant. When you're in debt to the IRS you do have some options to deal with that debt. Whether you want to setup a monthly payment plan, or try to settle your debt with an offer in compromise. Un-filed tax years put a big red stop sign in front of any negotiation efforts.
Why? You're not in compliance with the IRS. Compliance means you have to be up to date with all of your filings. If you are not in compliance the IRS won't work with you.
Collector's paradise…Don't get me wrong the IRS will work to get your money, but they'll do so through bank levies, wage garnishment, and asset seizures.
Here's the secret…So you want to settle your debt without the IRS taking your stuff. You don't want the IRS to file your returns for you and cause you to owe even more money. The question is: what can you do?
You can file those returns is what you can do! Depending on how far back those returns go you may not have all of the financial records from the time. You can get your basic information from the IRS in the form of a wage and income transcript. If you have any information for deductions or credits available great! If you don't you'll just have to settle for what is available.
If the IRS has substitute filed your returns you have to provide complete proof that their return was wrong. If you don't have the proof, you'll have to accept their return for you.
Once you're in compliance, however, you can begin working on your tax debt. You can put yourself in a position to at least discuss payment options with the IRS, or even settle your debt.