How to file back taxes for a small business

Business back tax returns, at a glance:

• Not filing a required return is a serious issue with the IRS.
• If your business doesn’t file, the IRS can file a return for you — with taxes and penalties.
• You should take special care when preparing and filing late returns, because the IRS gives them extra scrutiny.

You can get expert help filing business back tax returns with the IRS.

What you need to know about business back taxes

Most businesses are required to file a tax return every year. The IRS keeps a record of businesses that are required to file but don’t – and the IRS can pursue those returns. That can mean stiff consequences and increasing complications. If you haven’t filed business taxes, the IRS can charge expensive penalties and even file a return for the business without any credits or deductions in your favor (called a substitute for return).

Whether you have one or many returns to file, you or your tax pro should start taking steps right away to file an accurate and complete tax return that will get your business back in good standing with the IRS.

Here’s what to do.

How to file back taxes for a small business

1. Get all the information needed to file the past-due return.

• Start by requesting transcripts from the IRS. You can also order your business’s account transcript to see any payments or other credits that posted to the IRS account for that tax year.
• Gather information from your records to complete the return. This can be an extensive process, depending on your records. For a business income tax return, you’ll need to have a profit and loss statement, as well as a balance sheet. (Wondering why you need a profit and loss statement? Read our post: What is a P&L statement?) For employment tax returns, you’ll need to have information about employees, their wages, withholding and other items to be reported.
• If necessary, ask the IRS for more time to file the late return, to avoid any enforcement actions (such as a substitute for return, levy, or lien).
• Identify any special processing needed for your late-filed return (such as date-stamping or filing with an IRS compliance unit).
• If you have several past-due returns to file, the IRS normally requires that you file returns for the current year and past six years. But your specific facts and IRS rules will determine how far back you should file.

2. Complete the return and submit it to the appropriate IRS unit.

• Complete your business tax returns accurately. It’s best to double check your return against your IRS transcripts to make sure that you included all income as it was reported to the IRS, and that you included any tax payments. Businesses sometimes can receive a Form 1099 reporting their income to the IRS. You can call the IRS to get the income reporting under your business’s Employer Identification Number (EIN).  Ask the IRS for your “IRP” document (for Income Reporting Program). This will show your income reported to the IRS under the EIN. The filed return should reflect this income.
• If you owe and can’t pay the full amount, consider requesting a payment arrangement with the filed return.
• Attach a penalty relief request to the return, if applicable. If you have one past-due return to file, you may qualify for penalty relief on any failure to file and failure to pay penalties. If you have multiple returns to file, it’s more difficult to process the return and manage the resulting penalties and balances owed. You’ll need to investigate your penalty relief options further in these complex situations. If you’re filing a late S corporation (What is a Form 1120-S?) or partnership (What is a Form 1065?) return, you may need to wait. Sometimes it takes a while for the IRS to assess penalties for late filing, after which you may request penalty relief through a penalty abatement.
• Send your return to the right IRS location.
• Make sure you get proof that you filed, in case the IRS doesn’t process your return or you experience related compliance activity (like IRS collection notices, a lien, a levy, or an unfiled return investigation).

3. Monitor return processing and other compliance activities.

• Periodically request your business’s account transcripts or contact the appropriate IRS unit to make sure that the IRS processed your business tax return. It should take about two to three months before the IRS accepts the return. It can take up to six months if the IRS has filed a return for you in the past (called a substitute for return).
• If the IRS took prior actions on the unfiled return (such as filing a substitute for return), follow up to ensure that the IRS closed the case with no matters outstanding.

How to get expert help

Your H&R Block tax professional can help you track down all the information you’ll need to file a past-due business return, resolve any related compliance issues, and communicate with the IRS.

Learn more about H&R Block’s Tax Audit & Tax Notice Services.

Bring these five items to your appointment

1. A copy of IRS notices, especially the most recent notices, on the unfiled tax years
2. Any information statements that you may have for the year(s) in question
3. Proof of any tax payments you made. You can also bring your IRS transcripts as a proof.
4. Information needed to complete your business tax return, such as profit/loss statements, balance sheets, employee records, and other relevant records.  You should contact the tax professional ahead of time to understand the specific information needed for your circumstances.
5. A copy of any tax returns filed the year before and after the unfiled year(s) in question

More help with business back taxes

Whether you need help learning how to file back taxes for small businesses, or simply want general small business tax guidance, let Block Advisors help.

Find a pro nearest you.