Have a Tax Question? Ask a Tax Expert
First. File the return ASAP. There are penalties for late filing that continue to accrue. You need to mail the return as you can no longer e file a 2009 return.
You can include IRS for 9465 asking for a payment plan for the amount due. I would assume that if the amount on the return is $10K, it is close to $15K by now with penalties and interest.
1. The amount due- The best thing to do is to pay it. Interest will continue to compound daily retroactively from the original due date of the return. Pay the full amount as soon as possible to avoid owing more. If you cannot pay, and the total balance is under $25K, send IRS form 9465 as soon as possible to avoid the IRS taking collection action and filing a tax lien. The payment requested must pay the amount due within 60 months. If you cannot afford that, you need to complete IRS form 433F. The IRS will set a payment based on your financial ability to pay but will file the lien.
2. Penalty- You can file IRS form 843 to request the IRS remove the penalties. You will need a good reason for not including the income on your return, and you have a better shot if you pay the amount in full first. If approved, the IRS will refund the penalty that was paid.
3. Interest- The IRS will remove interest that has been charged on penalties if they remove the penalties. Otherwise, their is not method of requesting the reduction of the interest.
Note: Do not file an Offer in Compromise attempting to settle the debt. It will take 6 months to 2 years to process while interest continues to acrue only to be rejected. Then you owe twice as much. I would not take such steps without great representation.
I hope this helps. If so, please accept so that I receive credit. Feel free to comment as well. If you have further questions, please let me know.