Defaulting is not evading
Owing tax you cannot pay is generally a collection problem rather than a crime, and the IRS and the states have established tools for collecting it. Evasion involves willful acts to hide income or assets or to defeat payment, such as keeping false records or moving assets to avoid collection. Willfully failing to file required returns can also be prosecuted, even where no evasion is alleged. The line between a defaulter and an evader often depends on what someone did after the tax became due. Being candid about what you can pay is generally treated very differently from hiding what you have.
What collection can involve
Unpaid federal tax can lead to liens, levies on wages and bank accounts, and the offset of refunds. For seriously delinquent tax debts, the IRS can certify the debt to the State Department, which may deny or revoke a passport. New York has its own collection tools, including tax warrants and driver's license suspension for certain debts. Gather your notices, a list of filed and unfiled years, income records, and a picture of your current finances. Missing returns are usually the first thing to address, since collection options tend to be limited until filing is current.
Getting back into compliance
Paths include installment agreements, offers in compromise, currently-not-collectible status, and voluntary disclosure for people with possible criminal exposure. Which one fits depends on the facts, and a voluntary disclosure generally has to come before the IRS has started an examination or investigation to serve its purpose. At the outset we sort out which years are open, whether any criminal risk exists, and what you can realistically pay. If criminal exposure is a possibility, we discuss it before anyone contacts the IRS.
