If you haven't filed a tax return in one year — or several — you're not alone. Life gets complicated. A business hits a rough patch. A death in the family. A divorce. Health problems. Sometimes taxes fall through the cracks, and before you know it, years have passed. The good news is that filing back taxes in Maryland is very doable, and the sooner you start, the better off you'll be. Here's exactly what to do.
The IRS doesn't forget. Unfiled returns accumulate penalties and interest every single month. If you have W-2 income or 1099s on file, the IRS may have already filed a Substitute for Return (SFR) on your behalf — and they won't give you the deductions you're entitled to.
The longer you wait, the more you owe. Filing — even late — almost always results in a better outcome than doing nothing.
Maryland follows federal tax law closely, but also has its own penalties for non-filers:
| Consequence | What It Costs You |
|---|---|
| Federal failure-to-file penalty | 5% of unpaid taxes per month, up to 25% |
| Federal failure-to-pay penalty | 0.5% per month on the unpaid balance |
| Maryland penalty | Up to 25% of taxes owed, plus interest |
| Loss of refund | You have only 3 years to claim a refund — after that the IRS keeps it |
If the IRS determines you owe taxes and you haven't filed, they can garnish wages, levy bank accounts, and file federal tax liens against your property. Working with a CPA experienced in back tax situations can help you avoid these outcomes.
Start by pulling your IRS tax transcripts. These show which years have returns on file and which don't. Go to irs.gov/individuals/get-transcript, create an account, and download your Account Transcript for each year. Look for years that show "No Return Filed."
For Maryland, check marylandtaxes.gov to see what the state has on record.
For each missing year you'll need W-2s or 1099s (employers and clients), bank statements, receipts for deductible expenses, prior year tax returns if available, and Social Security numbers for dependents.
Can't find old W-2s? Request a Wage and Income Transcript from the IRS — it shows all income reported to them by employers and clients for that year. This is often the fastest way to reconstruct a missing year, and it's the same data the IRS would use against you in a Substitute for Return, so starting from it means no surprises.
Work chronologically — oldest to most recent. This is important because each year's return affects the next, the IRS expects returns in order, and Maryland requires the same sequence.
Use the tax forms for the year you're filing, not current year forms. Tax laws change annually and you must use the correct year's forms.
If you owe money, get all returns filed before negotiating a payment arrangement. The IRS won't discuss payment plans with non-filers — you must be compliant first.
Once all returns are filed, you can set up an Installment Agreement to pay over time, apply for an Offer in Compromise if you can't pay the full amount, or request Currently Not Collectible status if you have no ability to pay. Which path fits depends on your income, assets, and how much is owed — this is exactly where experienced representation earns its keep.
Maryland and the IRS are separate entities. Filing your federal returns does not automatically file your Maryland returns. You'll need to file both — and Maryland will want its share too.
The Maryland Comptroller's office is generally willing to work with taxpayers who come forward voluntarily. Voluntary disclosure almost always results in reduced penalties.
The IRS generally requires 6 years of back returns for taxpayers who want to come back into compliance. However, if you're owed refunds, you can only collect on returns filed within 3 years of the original due date.
For criminal prosecution purposes, the IRS can go back indefinitely on non-filers — another reason not to wait.
Technically yes — but back tax situations are complicated. Common mistakes include using the wrong year's forms, missing deductions you're entitled to, not addressing Maryland separately, filing without a resolution plan for what you owe, and missing IRS deadlines during the process.
A CPA with back tax experience can often reduce what you owe, protect you from aggressive collection actions, and make sure everything is filed correctly the first time. If you also own a business, our small business tax services can address both your personal and business filings together.
At Mercer Flanagan, we've helped individuals and small business owners in Frederick, MD and throughout Central Maryland resolve years of unfiled returns. We know how to work with the IRS and the Maryland Comptroller's office to get you back in compliance — and keep more money in your pocket in the process.
We handle complex situations that other firms avoid. Whether you're one year behind or ten, we'll put together a plan and walk you through every step. We also offer year-round tax planning so you never fall behind again.
Whether you're one year behind or ten, we'll put together a plan and walk you through every step — no judgment, just a path forward. Call (301) 662-6992 or book a free consultation.
Book a Free ConsultationFor the overwhelming majority of non-filers, no — this is a civil matter resolved with filings, penalties, and payment arrangements. Criminal exposure is reserved for willful evasion, and voluntarily coming into compliance is the strongest step you can take to put that risk behind you.
Yes. The IRS Wage and Income Transcript reconstructs the income side — every W-2 and 1099 reported under your Social Security number. Deductions take more work (bank statements, old invoices, reasonable reconstructions), but missing paperwork is a solvable problem, not a dead end.
Filing and paying are separate problems, and filing always comes first — the failure-to-file penalty is ten times the failure-to-pay penalty. Once you're compliant, options include installment agreements, an Offer in Compromise, or Currently Not Collectible status depending on your finances.
Only within the 3-year window from the original due date. Refunds older than that are forfeited permanently — which is why non-filers who were actually owed refunds should move fastest of all.
By Roy Cogliandolo, CPA · Mercer Flanagan · February 4, 2026
This article is general information, not tax or legal advice. Penalty rates and procedures change — specific back-tax situations should be evaluated by a qualified professional before acting.