Quick overview

Receiving a notice about unfiled returns can feel alarming, but the right sequence of actions often keeps the problem manageable. The IRS commonly issues notices such as CP515, CP518, or CP518A when it believes required individual returns are missing. These letters ask you to confirm whether you filed and, if not, to file the missing return(s). (See IRS guidance on responding to letters and notices: https://www.irs.gov/individuals/understanding-your-irs-notice-or-letter.)

In my 15 years helping clients through unfiled-return notices, the cases that move to collection or enforcement are usually the ones where taxpayers ignore the notice or delay responding. Acting within the timeframe on the notice and documenting your steps makes it far easier to negotiate payment plans, penalty relief, or other options.

Step 1 — Verify the notice is real

Scammers sometimes mimic IRS language. Before you give personal information or call a number on a notice, verify authenticity:

  • Look for official IRS sender information and a notice number (e.g., CP515, CP518, CP518A). The IRS has guidance on how to recognize real notices and what to do if you suspect fraud (IRS: “How to Verify the Authenticity of an IRS Notice”).
  • Compare the notice details to your records. If you used a tax pro that may have filed on your behalf, check with them.
  • If you’re unsure, use the IRS online tools (Get Transcript or your IRS online account) to confirm whether a return for the year is on file: https://www.irs.gov/individuals/get-transcript.

For additional guidance on checking notice authenticity, see our internal resource How to Verify the Authenticity of an IRS Notice.

Step 2 — Read the notice carefully and calendar deadlines

The IRS notice will usually state which tax year(s) are affected and the action the IRS expects. Typical instructions include:

  • Confirm whether you filed.
  • File the return(s) by a specified date or explain why you don’t have to file.
  • Provide missing documentation or contact information if you disagree.

Note and calendar the deadline printed on the notice. Even if you cannot pay the tax, filing on time (or quickly after receiving the notice) reduces failure-to-file penalties and gives you access to payment options.

Step 3 — Gather records and get wage & income transcripts

Collect the documents you’ll need to prepare the missing return(s): W-2s, 1099s, 1098s, bank statements, business records, K-1s, and receipts for deductions. If you’re missing forms, request wage and income transcripts from the IRS (these show third-party reports the IRS has) at https://www.irs.gov/individuals/get-transcript.

Pro tip from my practice: if you’re missing several years of records, order IRS wage & income transcripts for each year before starting return preparation — it speeds accuracy and prevents unnecessary amendments.

Step 4 — Prepare and file the missing returns

Prepare accurate returns for each missing year. A few points to consider:

  • File the returns even if you cannot pay the tax due. Filing stops or reduces failure-to-file penalties that are larger than failure-to-pay penalties.
  • Some older returns may not be accepted electronically. If e-file isn’t an option for a tax year, print and mail the completed return with original signatures and any required schedules.
  • If you are unsure of income amounts, use transcripts or reasonable estimates and document your methodology; file an amended return later if you get corrected forms.

If you prefer professional help, a CPA or enrolled agent can prepare and file multiple years at once. Granting Power of Attorney (Form 2848) lets a practitioner represent you directly with the IRS.

Step 5 — Understand penalties, interest, and statute of limitations

Key rules to know (current as of 2025):

  • Failure-to-file penalty: generally 5% of the unpaid tax per month, up to 25% (plus additional rules for returns more than 60 days late).
  • Failure-to-pay penalty: generally 0.5% per month of unpaid tax (usually assessed in addition to the failure-to-file penalty), up to 25%.
  • Interest accrues on unpaid tax from the original due date until paid.
  • If you never file, the statute of limitations for assessment does not typically start. In other words, the IRS can assess tax for an unfiled year at any time (whereas a filed return normally allows a three-year assessment window). See IRS general penalty and assessment guidance: https://www.irs.gov/taxtopics/tc650.

Because interest and penalties compound, filing as soon as possible usually reduces the total balance.

Step 6 — If you owe taxes, evaluate payment and relief options

If your missing returns show tax due, the IRS offers several paths to manage payments:

  • Installment Agreement: If the balance is within IRS thresholds, you may qualify for a streamlined installment agreement allowing monthly payments. See IRS payment plan options: https://www.irs.gov/payments/payment-plans-installment-agreement. Our guide on Streamlined Installment Agreements explains typical eligibility and how to apply.
  • Offer in Compromise (OIC): If you can’t pay the full tax and meet strict criteria, an OIC may let you settle for less than the full balance. Preparing the financial package carefully is essential — see Preparing a Financial Package for an Offer in Compromise for required worksheets and documents and the IRS OIC landing page: https://www.irs.gov/individuals/offer-in-compromise.
  • Currently Not Collectible (CNC): If paying even minimum monthly amounts would create financial hardship, the IRS may temporarily defer collection and place your account in CNC status. You’ll still accrue penalties and interest.
  • Penalty abatement: You can request penalty relief for reasonable cause (serious illness, natural disaster, death in family, etc.). In my experience, a well-documented request that shows the circumstance preventing timely filing can succeed. See IRS penalty relief info: https://www.irs.gov/payments/penalty-relief.

Choose the least costly option that fits your situation and document communications with the IRS.

Step 7 — Communicate with the IRS (and keep records)

When you contact the IRS, be prepared with the notice number, taxpayer information, and years in question. If you owe and can’t pay, ask about setting up an installment agreement on the call or request instructions for submitting an OIC or penalty abatement. Always:

  • Communicate in writing (mail and keep a copy) when possible.
  • Save confirmation numbers, names of representatives, and dates of calls.
  • Send certified mail when submitting important documents.

If you prefer, authorize a tax professional (Form 2848) to speak with the IRS on your behalf. That reduces opportunities for miscommunication and can speed the resolution.

Common scenarios and recommended responses

  • You never filed for a year and owe tax: File the return immediately. Then evaluate payment options (installment agreement or OIC if eligible).
  • You filed but the IRS shows no return: Obtain a tax return transcript to confirm filing. If you used a paid preparer, confirm they filed it and ask for proof (e-file acceptance or a stamped copy). If you find an error or missing return, re-file or provide documentation to the IRS.
  • You are missing W-2s or 1099s: Use IRS wage & income transcripts to reconstruct income before filing.

Practical checklist — immediate actions

  1. Verify notice authenticity and read instructions.
  2. Calendar the IRS deadline.
  3. Order wage & income transcripts for the affected years.
  4. Gather W-2s, 1099s, receipts, and business records.
  5. Prepare and file the missing return(s) — file even if you can’t pay.
  6. If you owe taxes, apply for an installment agreement, OIC, or request CNC status as appropriate.
  7. Keep copies of everything and document all IRS contacts.

When to get professional help

If you have multiple years unfiled, large balances, business returns, or complex income sources, working with a CPA, enrolled agent, or tax attorney reduces mistakes and can protect you in dealings with the IRS. In my practice, early professional involvement often prevents enforced collection (levies, liens) and uncovers penalty relief opportunities.

Links & resources

Internal FinHelp resources:

Final notes and professional disclaimer

In my experience, timely, documented responses to unfiled-return notices prevent escalation. Filing missing returns—even when you can’t immediately pay—reduces penalties and expands your options for payment relief. This article provides educational information, not tax or legal advice. For advice tailored to your situation, consult a qualified tax professional or CPA.

(Information current as of 2025. For specific IRS procedures and forms, check the IRS website.)