Do You Need to File All Missing Returns Before Negotiating With the IRS?

Yes. In most cases, you need to file all missing tax returns before the IRS will negotiate with you.

The IRS requires taxpayers to be in filing compliance before it will consider any type of resolution. This simply means that all required tax returns must be submitted and up to date. It does not matter if you cannot afford to pay the balance right now. Filing comes first.

Why Filing Comes First

The IRS cannot properly evaluate your situation if your records are incomplete. Without all required returns on file, they don’t have a clear picture of how much you owe or what your financial situation looks like.

Because of this, the IRS will generally not approve options like installment agreements or offers in compromise until you are fully compliant. If returns are missing, your account remains in a noncompliant status, and negotiations typically stop there.

You may also run into situations where the IRS has filed a substitute return on your behalf. These returns are often based on limited information and may overstate what you owe. Even then, you are still expected to file your own accurate return to replace it.

What to Do If You Have Missing Returns

If you have unfiled returns, your first step is to get them prepared and submitted as soon as possible. This can feel overwhelming, especially if you are several years behind, but it is a necessary step to move forward.

Once your filings are current, you can begin looking at your options. At that point, the IRS can evaluate your account and determine what type of resolution may be appropriate based on your financial situation.

Final Thoughts

Yes, you generally need to file all missing returns before negotiating with the IRS. There are very few exceptions to this rule. While filing does not immediately solve the problem, it puts you in a position to actually address it. Without it, most relief options are simply not available.