If you’ve finally filed old tax returns—whether five years or fifteen—you’ve done the hardest part. Most people feel a huge weight lift the moment the returns are submitted. But the next question is: What comes next?
Here is a clear, step-by-step explanation of what happens after you file back-year returns with the IRS.
1. The IRS Enters and Processes Your Returns
Once submitted, the returns go into a processing queue. Older returns often take longer—anywhere from two weeks to several months.
During processing, the IRS will:
- Verify income reported matches their records
- Compare your return with Wage & Income transcripts
- Adjust math errors
- Post the return to your account
If anything doesn’t match, you may receive a notice—but this is common and often simple to fix.
2. The IRS Updates Your Account and Determines Your Balance
Once the return is processed, the IRS calculates:
- Tax owed
- Penalties
- Interest
Common penalties include:
- Failure-to-file penalty (5% per month)
- Failure-to-pay penalty (0.5% per month)
If you filed voluntarily before an IRS enforcement action, penalties are often lower—and may later qualify for abatement.
3. Refunds Are Issued If You Were Overpaid
If the return shows a refund, the IRS will send it—if the return is within 3 years of the original due date.
Older refunds expire permanently.
Still, filing those years is important because they affect compliance status.
4. The IRS Removes Substitute for Returns (If You Had Them)
If the IRS previously filed Substitute for Returns (SFRs), your actual returns replace them. This often dramatically reduces your balance.
It is not unusual for taxpayers to save thousands by replacing SFRs with accurate returns.
5. If You Owe, You Can Set Up a Payment Arrangement
Once the IRS posts the balance, you can arrange:
- Installment agreements
- Partial payment plans
- Penalty abatement requests
- Offer in Compromise (in certain cases)
But you must be current on all recent-year filings first.
6. IRS Collection Activity Often Pauses During Review
While returns are being processed, the IRS typically does not pursue active enforcement such as:
- Levies
- Garnishments
- Seizures
This is another reason filing proactively is so beneficial.
Final Thoughts Once you file your old tax returns, the IRS process becomes far more predictable—and much less stressful. Most taxpayers discover the outcome is far better than they feared. A CPA who specializes in old returns can help you navigate every step until your account is fully resolved.
