Hello and Thank you for requesting me. I am sorry I have not been online yesterday or I would have addressed your situation sooner.
An experienced EA can definitely assist you with your situation--as enrolled agents are professional experts in individual taxation matters. You also have the option to see a CPA or a tax attorney, but this is not absolutely necessary.
I know it does seem overwhelming to you---and that your tax issues involve multiple years. However, from what you have described---your back years can still be filed and the outcome may not be as bad as you fear. Keep in mind that the IRS will do mock returns for you based on the information that they have and send you a bill--but this may not represent what you actually owe.
As the other expert pointed out, it would be prudent to order transcripts of your 1099s and W2s for the open years that you did not file:
"Form W-2, Form 1099 series, Form 1098 series, or Form 5498 series transcript"
on the 4506T. This can help you reconstruct your income/expenses.
For the years 2005 and 2004, since you worked as an employee and taxes were taken out of your pay, you may actually not owe for those years. However, it is too late to claim a refund. (refunds may generally be claimed up to three years after the due date of a return). You should still do returns for these years for completeness. The W2 information can be received from the IRS transcript that you order.
For the years that you had a business, you need to file returns. You will need to compile your business records, and complete Schedule C for each year. (Tax professional can help you with this). For the years that you had the business but did not make any money, you will probably be able to use what is called a "Net Operating Loss" which can be carried back or forward for a certain # XXXXX years to offset tax liability in a different year. (You will definitely need an experienced tax professional for help with this).
For the years that you had charge-off income, this is considered "income" but if you have no other income that year it should not generate a tax liability. Also, if you were considered insolvent (liabilities greater than overall assets at time of chargeoff) then those amounts will not be considered taxable, but a Form 982 will need to be filed for each year that this applies.
The 401K is income, and I presume that some taxes were taken out of the proceeds before you were paid---but keep in mind you have condos so you will probably be able to benefit from rental losses and personal deductions such as mortgage interest and real estate taxes.
Regarding the condo that you are renting---This will be considered real estate converted from personal use to rental use. When you rent real estate, even if you do not have an initial profit, you should be reporting your rent/expenses on your tax return. Generally, a person is allowed up to a 25K rental loss. This may offset other income that year.
So the steps that I would take regarding your situation are:
1.) find a reputable experienced tax professional in your area and negotiate a price for assistance with your situation.
2. Have the tax pro contact the IRS on your behalf (usually will need power of attorney specifically designed for this situation) to alert them to the fact that you are settling all tax issues and see if they will give you an extension before placing any leins or levies on your property.
3. Order transcripts of returns and W2, 1099 series for all open years. (It may help to get actual copies of W2s as the IRS transcripts do not include state tax information)
4. Compile your business and rental records for applicable years.
5. Work with tax pro to get open returns filed.
As far as State tax goes, I don't know what state you are from. Some are more aggressive than others in tax collection matters. Also, the IRS and states work together and share income information. So it would be prudent to complete your state tax returns contemporaneously with the federal returns.
To answer your questions of how long before the IRS swoops in and takes everything from you, that will vary depending on the situation, how much they think you owe, etc. Seeking help from a tax pro and asking for time to compile your information can halt collection procedures. The IRS also must follow guidelines such as giving you notice letters before placing leins or levies. I am going to link you to several publications regarding your rights and collections. For finding an enrolled agent, you can use the NAEA database: https://portal.naeacentral.org/webportal/buyersguide/professionalsearch.aspx
Or you can go to a district HR Block office. HR Block does provide audit assistance and EA representation even for clients who did not have taxes done there.
Here are pubs on rights of a taxpayer and collections:
I am confident that everything will work out for you--I wish you the best. You are wise to try to take control of this situation.