Getting Back on Track With Unfiled Returns
Falling behind usually starts with one missed return and grows from there. In South Dakota the problem often has two parts: federal income tax returns that were never filed, and state sales, use or contractor's excise tax returns that stopped going in. BOMCAS helps individuals and businesses rebuild their records, prepare the missing returns, and draft clear responses to notices so they can get current and stay that way.
What We Do, and What We Do Not Do
We reconstruct income and expenses, prepare late federal and state returns, calculate what is owed, prepare written responses to notices for you to sign, and set up bookkeeping so the problem does not return. BOMCAS does not represent clients before the IRS. If your matter needs someone to act for you under a power of attorney, such as an appeal, an examination or a collection negotiation, you will need a representative authorized to practise before the IRS, such as an attorney or enrolled agent. We can work alongside the representative you choose and supply the returns and records they need.
Unfiled Federal Returns
The IRS generally focuses on the last six years of unfiled returns when it asks a taxpayer to become compliant, though it can require more in some cases. Penalties grow with time:
- The failure-to-file penalty is 5 percent of the unpaid tax for each month or part of a month a return is late, up to 25 percent.
- A separate failure-to-pay penalty and interest apply to tax that is not paid on time.
A CP59 notice means the IRS has no record of a return it expected. If the IRS has wage and income information but no return, it may prepare a substitute return that ignores deductions and credits you could claim. Filing a correct return, even if you cannot pay in full, stops the filing penalty and usually lowers the balance compared with a substitute return. The IRS offers payment plans for balances that cannot be paid right away.
Rebuilding Records
Many late filers no longer have complete records. We request IRS wage and income transcripts to see what was reported under your Social Security number or EIN, use bank and card statements to reconstruct business income and expenses, rebuild depreciation schedules, and ask for missing slips from payers. For farms and contractors, we rebuild inventory and job records as well. Each year is documented so the return can be supported if questioned.
South Dakota Sales Tax Delinquency
South Dakota treats unfiled sales tax returns seriously, because the tax collected from customers is held in trust for the state. A return that is not received within 30 days after the month it is due carries a 10 percent penalty, with a $10 minimum even when no tax is due, and unpaid tax accrues interest of 1 percent a month. If returns stay unfiled or unpaid, the Department of Revenue may:
- Estimate the tax and issue an assessment with penalty and interest.
- File a tax lien with the register of deeds in any county.
- Revoke the tax license. Continuing to do business after revocation is a Class 6 felony.
- File a criminal complaint. Failing to file or pay one return within 60 days of its due date is a Class 1 misdemeanor, and doing so twice in 12 months is a Class 6 felony.
- Refer the debt to the state's collection agency.
For corporations, LLCs and partnerships, the department can pursue officers, managers and partners. If a Notice of Balance Due or Delinquency Notice has arrived, it should be dealt with right away.
Voluntary Disclosure for Businesses That Never Registered
A business that should have held a South Dakota sales tax license but never registered may qualify for the Department of Revenue's voluntary disclosure program. Benefits can include a waiver of penalties, an agreement that the department will not pursue criminal prosecution, and 60 days to determine the liability and prepare returns. You can look into the program anonymously, but the application itself must be in writing. It is not available if the business already holds a license, has collected South Dakota sales tax, has been contacted by the department or the Multistate Tax Commission for an audit or nexus questionnaire, or is under audit or investigation. Remote sellers that crossed the $100,000 threshold without registering often fit this program.
Responding to a Notice
Notices have deadlines. Send us the full notice, every page, as soon as it arrives. We compare it to your records, tell you whether it appears correct, and prepare a response or the missing return. Ignoring a notice almost always narrows the options.
Staying Current Afterwards
Once the back returns are filed, we set up monthly bookkeeping, a filing calendar for sales tax and payroll, and quarterly estimates where needed. Most people who fall behind did so because no one owned the calendar, and that is the part we take on.
South Dakota Back Taxes and Late Filing Questions
How many years of unfiled returns do I need to file?
The IRS generally focuses on the last six years when bringing a non-filer into compliance, though it can require more in some cases. We review your transcripts to see which years matter.
What happens if I don't file South Dakota sales tax returns?
Penalty and interest accrue, and the Department of Revenue can assess tax, file liens, revoke your license and file criminal charges. Failing to file or pay one return within 60 days of the due date is a Class 1 misdemeanor.
Does BOMCAS represent me before the IRS?
No. We prepare returns, rebuild records and draft notice responses for you to sign. If you need formal representation, you will need an authorized representative such as an attorney or enrolled agent, and we can work with them.
Can a business that never registered for South Dakota sales tax avoid penalties?
It may qualify for voluntary disclosure, which can waive penalties and rule out criminal prosecution, if it is not already licensed, has not collected the tax and has not been contacted for an audit.
Talk to BOMCAS About Back Taxes and Late Filing in South Dakota
Once you are caught up, staying current is much easier with ongoing bookkeeping and, for employers, payroll. Future years are handled through business tax preparation and personal tax preparation, and our sales and use tax work covers the returns that most often fall behind. Tax planning helps keep it from happening again, and anyone with unfiled returns in both countries should read about cross-border tax. For a summary of how South Dakota taxes businesses and residents, see the South Dakota accounting and tax overview or our United States services.
Tell us what you need help with and we will reply with next steps. Contact BOMCAS, use the contact form below, call 780-667-5250 or email info@bomcas.ca. You can also go back to the South Dakota overview. This page is general information, not advice for a particular situation.