Summary of What This Blog Covers
- Falling behind on taxes is common and fixable.
- Start by gathering income records and filing past-due returns.
- The IRS offers payment plans and penalty relief options.
- A CPA can help you get caught up and stay on track long term.
Let’s be honest: life gets busy, business gets messy, and taxes? They tend to get bumped down the priority list.
Sound familiar?
If you’re behind on your taxes, whether it’s one return or several, you’re in the right place. And no, it’s not too late to fix it.
At Insogna CPA, we’ve helped entrepreneurs across the country (and plenty of them right here in Austin) get caught up on back taxes, navigate the IRS, and create clean, proactive systems that keep them compliant for good.
This blog is your roadmap: how to stop avoiding those unopened IRS letters, how to get everything filed and paid, and most importantly, how to never end up behind again.
Whether you’re one year late or haven’t filed since your first Shopify sale in 2018, you’re not alone and you’re not stuck.
Let’s get started.
Why Business Owners Fall Behind on Taxes (And Why It’s More Common Than You Think)
One of the first things we tell new clients: falling behind doesn’t mean you’ve failed. In fact, we see this more often than you’d think, especially with solo founders and first-time business owners.
The U.S. tax system is built for W-2 employees. Once you go out on your own, that structure disappears and suddenly, you’re responsible for things you were never taught:
- Quarterly estimated payments
- Tracking income across multiple sources
- Identifying legitimate deductions
- Setting aside funds in real time
Here’s a breakdown of why entrepreneurs fall behind:
1. No Tax Withholding
Employees have taxes automatically withheld from their paychecks. Business owners? Not so much. If you’re self-employed, the IRS expects you to withhold your own taxes and submit them every quarter. But if you didn’t know that, or weren’t told how, it’s easy to miss.
2. Quarterly Tax Confusion
If you expect to owe more than $1,000 in taxes, you’re required to make estimated payments throughout the year—usually in four installments. But these rules aren’t widely known, and many business owners find themselves caught off guard.
3. Disorganized Bookkeeping
Without a consistent system for categorizing expenses and tracking income, tax filing becomes a daunting task. This is especially true for entrepreneurs managing revenue across Stripe, Shopify, PayPal, Venmo, Zelle, and multiple bank accounts.
4. Fear and Avoidance
Maybe you missed one return. Then another. Before long, it feels too overwhelming to fix so you avoid it. That’s human. But we promise, the solution is almost always less painful than the anxiety.
We’ve seen it all. And whether you’re one return behind or haven’t filed in six years, you can recover and rebuild starting now.
What Happens If You Don’t File or Pay Your Taxes?
The IRS doesn’t go away when you ignore them. In fact, the longer you wait, the more aggressive they can become.
Here’s what to expect if you stay in non-compliance:
1. IRS Files a Return for You
This is called a Substitute for Return (SFR). They file it using income data they have but with no deductions, credits, or exemptions. That means you’ll owe more than you should.
2. Penalties Start Adding Up
There are two big ones: the late filing penalty (5% per month, up to 25%) and the late payment penalty (0.5% per month, also up to 25%). And don’t forget daily interest.
3. Enforcement Actions Begin
If your tax debt grows large enough, the IRS may:
- File a tax lien on your assets
- Freeze your bank accounts
- Garnish your wages or business income
- Send your case to collections
The good news? When you reach out and file voluntarily especially with the help of a CPA in Austin, Texas, the IRS is significantly more flexible.
Step 1: Gather and Reconstruct Your Income Records
Before we file anything, we need to know what you earned in the years you missed. This may sound overwhelming, but your records are often easier to reconstruct than you think.
What to Collect:
- 1099 forms (from clients or platforms like Upwork, Stripe, PayPal, Shopify, Amazon, etc.)
- W-2s (from any jobs held during those years)
- Bank and credit card statements
- Invoices, spreadsheets, or POS reports
- IRS transcripts (your CPA can request these directly on your behalf)
Even if you’re missing some documentation, a certified CPA near you can help estimate income based on bank deposits or IRS data.
Pro Tip:
Don’t guess. The IRS has matching programs that can flag discrepancies. We make sure your filings are accurate and defensible.
Step 2: Identify and Apply Business Deductions
The IRS may know your income but they don’t know your expenses. And if you don’t tell them, they assume you had none.
That’s why capturing your business deductions is critical. It directly reduces how much you owe.
Common Deductions You May Qualify For:
- Home office deduction (must be used exclusively and regularly for business)
- Phone and internet (business portion)
- Software subscriptions (Zoom, Canva, Adobe, QuickBooks, Dropbox)
- Advertising and marketing (Google Ads, Facebook Ads, website design)
- Professional services (attorneys, CPAs, consultants)
- Business mileage, meals, and travel
- Startup expenses if the business launched within the missed years
At Insogna CPA, a leading Austin accounting firm, we specialize in helping clients capture every dollar they’re entitled to while staying fully compliant.
We’ll also make sure your deductions are audit-ready, just in case the IRS takes a second look.
Step 3: File All Back Tax Returns Accurately
Here’s where we get you officially caught up. If you haven’t filed in multiple years, we’ll prioritize what the IRS needs first, usually the past six years.
Our Process:
- Prepare accurate filings with all deductions, credits, and supporting records
- Review past IRS notices, if you’ve received any
- Resolve any Substitute for Return issues
- Submit directly to the IRS, along with supporting documentation
- Communicate with the IRS on your behalf so you don’t have to
If your case involves international accounts, we’ll also handle FBAR filing, which is required if your foreign accounts ever exceed $10,000 in value during a tax year.
Step 4: Resolve Your Tax Debt
Once you’ve filed, the IRS will issue a notice of how much you owe, including penalties and interest. This can be shocking but it’s not the end of the world.
Ways to Handle IRS Balances:
- Installment Agreements: Spread payments over 72 months
- Offer in Compromise (OIC): Settle your tax debt for less than the full amount (based on income, expenses, and assets)
- Currently Not Collectible (CNC): Delay collection due to financial hardship
- Penalty Abatement: Reduce or eliminate penalties for first-time noncompliance or reasonable cause
- IRS Fresh Start Program: A broader set of relief options for those who qualify
At Insogna CPA, we assess every client’s case individually. As your tax advisor in Austin, we’ll explore every IRS program available to reduce what you owe and make repayment manageable.
Step 5: Build a Future-Proof Tax System
Once we’ve cleaned up the past, it’s time to make sure you never fall behind again.
We help our clients implement systems that are simple, automatic, and sustainable—even as your business grows and scales.
Our Post-Catch-Up Game Plan Includes:
- Quarterly estimated tax calculations (with payment reminders)
- Monthly bookkeeping and reconciliation
- Business entity review (is it time to become an S Corp?)
- Dedicated tax account to stash away 25–30% of revenue
- Year-round planning meetings to track growth and tax impact
- Cloud-based accounting software setup (QuickBooks, Xero)
- **Ongoing support from a dedicated CPA near you who knows your business inside and out
We’re not just fixing past returns. We’re building the system that keeps your business in control for years to come.
How We Help Business Owners Just Like You
At Insogna CPA, we’ve worked with:
- Freelancers who forgot to file during their first year of business
- Ecommerce sellers scaling fast but falling behind on compliance
- Agency owners hit with late-payment penalties
- Consultants with multiple years of back taxes and no bookkeeping system
- Founders who hadn’t filed in five years and thought they’d never catch up
The common thread? They all got caught up and they all sleep better now.
If you’re searching for tax services near you, CPA firms in Austin, Texas, or tax help for self-employed, you’ve found your people.
Final Thoughts: You Can Do This and We’ll Help Every Step of the Way
Catching up on back taxes feels overwhelming until you take that first step. Then, with the right help, it gets manageable. Clear. Empowering.
You don’t need to navigate IRS rules alone. You need a team that understands small business, respects your journey, and brings real strategy to the table.
Schedule a consultation with Insogna CPA today. We’ll help you:
- Reconstruct income and records
- File back taxes accurately
- Resolve IRS balances and reduce penalties
- Build a proactive system that keeps you current
- Move forward with confidence
We’re here for you. No judgment. No stress. Just clean, clear guidance and smart tax strategy so you can run your business, build your wealth, and finally breathe again.