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Unfiled Tax Returns

The American tax system is a complicated web, especially compared to how other countries have designed their tax systems. These complexities lead to millions of Americans running afoul of the IRS in the form of unfiled tax returns. Unless you meet particular qualifications, you will be required to file a federal tax return every year. 

The income tax system in America is based on self-assessment, and the IRS relies on you to provide accurate information on time. The IRS may overlook unfiled tax returns for quite some time. 

However, the potential penalties can be very severe if they discover lapses in returns. It will most likely take quite a bit of time, a large sum of money, and the aid of licensed tax professionals to help you settle the liability.

What Happens if You Don’t File Your Tax Returns?

Not filing your taxes is a bit like driving 20 mph over the speed limit. You might get away with it for some time, but the longer you do it, the more likely it will end with severe consequences.

There are no triggers, alarms, or flags that will go off when you fail to file your return, but that doesn’t mean someone didn’t notice it. Failure to file can be a very serious deal and lead to a wide variety of financial and legal issues. 

These are some of the possible consequences for not filing your tax return:

  • The IRS can create levies against you. Although it won’t happen immediately, the IRS can impose levies against you and your assets. The most common example of a levy is wage garnishment. The IRS will take a percentage of your paycheck until the tax liability is paid or agreed upon a tax relief settlement. In severe cases, the IRS can even seize your physical property and assets. They will sell them off, and any of the money made will be applied to your tax liability. 
  • You can forfeit previous returns. It’s possible that you overpaid your taxes in earlier years and would be entitled to a refund had you filed. However, if a return is older than three years, then the refund is forfeited. Not only will you not receive your refund in any form, but it also won’t count toward any of your current tax obligations. 
  • The IRS can file your return for you. Also known as Substitute for Returns, the IRS is within their legal rights to file your tax return for you if you have failed to do so. While that might sound like a favor, it’s not something that will be beneficial to you in any way.
    When the IRS files your taxes, they will not include any deductions, exemptions, or applicable credits to your return, so you will be taxed at a higher rate than normal. They will also include various penalty fees and charge interest for being late. The result of all these factors will mean you are paying a lot more in taxes than you would by filing yourself.
  • You could go to jail. It’s unlikely that you will face time in prison for failing to file, but it’s possible. The world-famous actor Wesley Snipes served a three-year prison sentence for tax evasion, which showed that no one is beyond the reach of the IRS. Every year that you fail to file your taxes is another year that you could serve in prison. Tax evasion charges are only applicable for up to six years from your most recent missed filing date, so sentences are typically five years or less. 

How Do You File Past Due Returns?

The good news is that it’s never too late to file your returns. The sooner you file any unpaid taxes, the less severe the taxes, penalties, and various charges. 

You can file your late tax returns in the same place that you would normally file them. It might be a good idea to have a tax professional look over them once or twice to ensure that everything is right and that you haven’t made any mistakes that could result in further trouble.

If you cannot currently pay your entire tax liability in full, you might be eligible for entry into the Fresh Start Program offered by the IRS. These various programs help taxpayers make payments on their outstanding tax liability and avoid legal or financial consequences. 

The Takeaway


Filing your taxes can be stressful, but it’s an important part of life in America. Although you might be able to get away without filing your tax return for a few years, the potential consequences aren’t worth the risk. You could face stiff fines and financial penalties, have your wages, assets, and property seized, and might even spend time in prison. 

Even if you are behind on filing for a few years, it’s best to file them as soon as you can. You should consult with a tax professional about various programs and options available to you for repayment. At Coast One Financial Group, we will explain your options and help you decide the best path forward to a healthy financial future. 


Filing Taxes Could Be Free and Simple. But H&R Block and Intuit Are Still Lobbying Against It. | ProPublica.org

Do I Have to File Taxes? | Investopedia

What happens if you don’t file a tax return? | CBSNews.com

US Tax Court To Wesley Snipes: Pay The IRS | Forbes.com

Filing Past Due Tax Returns | IRS.gov

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