What happens if I don’t file taxes on time?

Things happen… If you have unfiled tax returns it’s a problem you’ll want to get solved sooner rather than later because there are consequences.

Updated February 12, 2022 | 5 Min Read

Unfiled tax returns can happen to anyone. You might have been sick, hurt, your business failed, or you went through a divorce. It doesn’t take much for taxes to become the least important thing in your life. One missed year can quickly become two, two becomes 4, and now you’re scared and don’t know what to do!

Let’s find out what your best course of action is if you find yourself with unfiled returns.

In this article we will discuss:

Consequences of not filing taxes on time

In this article we will discuss solutions, but in fairness you need to understand the consequences of not filing your taxes.

Yes, technically jail is a possibility
Failing to file a return could lead up to a year in jail for every year you failed to file. The reality, however, is that unless you were intentionally not filing, you’re not in any real danger. You’re worth a lot more to the IRS out earning an income than sitting in a jail cell.

Failure to file Penalties
The Failure to File Penalty is 5% of the unpaid taxes for each month or part of a month that a tax return is late. The penalty won’t exceed 25% of your unpaid taxes.

Failure to Pay Penalties
The Failure to Pay Penalty is 0.5% of the unpaid taxes for each month or part of a month the tax remains unpaid. The penalty won’t exceed 25% of your unpaid taxes.

Both failure to file & failure to pay
If both a Failure to Pay and a Failure to File Penalty are applied in the same month, the Failure to File Penalty will be reduced by the amount of the Failure to Pay Penalty applied in that month. For example, instead of a 5% Failure to File Penalty for the month, we would apply a 4.5% Failure to File Penalty and a 0.5% Failure to Pay Penalty.

As you can see it massively beneficial to file your taxes even if you don’t think you can pay what you own.

Don’t forget about interest!
Unfortunately on top of the penalties you’re going to be accruing interest. To make matters worse you will likely end up paying interest on the penalties!

Interest will begin starting on the due date of the original return or additional tax posting for audits and continue until the debts are resolved.

Say goodbye to refunds
If you have money coming back and you don’t file within 3 years of the return due date the IRS gets to keep it! So even if you don’t owe them anything you might be letting precious refunds slip away.
If you do owe for any of the tax years, until you resolve your issue the IRS will take all of your refunds. They can even levy your state refunds as well.

They may have filed a bad return for you!
IRS has income records for most Americans, so when years of unfiled returns start to add up they may have prepared a Substitute for Returns on some of the delinquent filings. The IRS is usually not very generous on these filings. They might have you down for a filing status with less benefits like married filing separate instead of married filing joint, and not given you dependents or other deductions you could have been entitled to. Filing your original returns can correct these issues.

Letting balances get out of control can cause collection issues
The IRS has a pretty big toolbox and has quite a few ways to get their money including:

  • Garnishing your wages
  • Levying Social Security payments
  • Taking funds from your bank accounts
  • Placing liens on your property
  • Revoking your passport

Start the tax relief process and get back in compliance

Whether you have forgotten to file your tax return one year or the last six the first thing you need to realize is the IRS will catch up with you. It’s possible to go a couple of years without hearing anything, but I promise they will find you. The best thing you can do is proactively reach out and start the tax relief process.

We highly recommend filing out our survey and getting personally matched with a vetted tax resolution pro to help you through the process.

The first thing they will do is get you back in compliance by filing any necessary unfiled tax returns. The IRS won’t negotiate with you until everything is filed and you are able to calculate the total amount you owe.

Next the tax pro will go through a complete review of your financials to figure out what your reasonable collection potential is.

Once this has been calculated they will be able to figure out what the best avenue to settle your tax debt is (Offer in Compromise, Installment Agreement, Currently Non Collectable).

At this time they will also be able to figure out if you qualify for any penalty abatement. Some IRS penalties can be abated if you are a first time offender or if you have an IRS approved reasonable cause.

You’re probably overwhelmed but don’t delay any longer

Tax problems that stem from unfiled returns can often spiral out of control. Years later you find yourself saying I am willing to pay everything I owe if only there wasn’t so much penalties and interest.

The unfortunate reality is your problem is getting worse by the day. The only way to resolve it is with action, and you can take the first step right now. Click here to fill out our form and we will match you with a licensed tax resolution pro for a 100% free consultation. You have nothing to lose and worst case scenario you gain clarity into a complex issue.

Start Your Tax Relief Journey

You don’t need to do this on your own. Let the team at TaxpayerBillofRights.com help you find a qualified Certified Tax Resolution Specialist!

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IRS Fresh Start Program

Navigating the IRS on your own is a real challenge. Find a trustworthy practitioner to help with your tax problem.

We specialize in connecting taxpayers struggling with IRS issues and trusted tax professionals that can help them get back on track!

Our partnership with the American Society of Tax Problems Solvers (ASTPS) gives us access to the top tax resolution experts across the country. There is no way for a practitioner to buy their way in, they can only apply after they have met our rigorous requirements.

Click the button below to see if you qualify for tax relief and to start the tax resolution process right now! You have absolutely nothing to lose - this is a completely free service for taxpayers!

On a similar note...

I got a letter from the IRS – Now What?

IRS Fresh Start Program

Do I Need a Tax Attorney?

You don't have to do this on your own.

We've worked hard to create a network of the best IRS tax relief experts in the country! Each one has been fully vetted and have met our rigorous experience, education, and training standards.

Your first step to IRS tax relief is to click the button below and fill out our tax relief evaluation. After you finish you will be able to set up a 100% free consultation with a licensed tax pro in our network. You have absolutely nothing to lose, and worst case you'll gain insight into your options!