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"What are the consequences of failing to file taxes?"

Picture of Chris Battis By   ·  1 minute read

Failing to File Taxes: Consequences and Risks

Failing to file taxes can result in a variety of consequences, both civil and criminal. The specific consequences can depend on the circumstances of the case, such as the amount of taxes owed, whether the failure to file was intentional, and whether the taxpayer has a history of noncompliance with tax laws.

Civil Consequences

Civil consequences of failing to file taxes can include:

  1. Penalties: The IRS can impose a penalty of 5% of the unpaid taxes for each month or part of a month that the return is late, up to a maximum of 25%.
  2. Interest: Interest will accrue on any unpaid taxes, and can compound daily until the tax debt is paid in full.
  3. Liens and Levies: If taxes are not paid, the IRS can file a tax lien against a taxpayer's property, which gives the IRS the right to collect the debt from the sale of the property. Additionally, the IRS can levy a taxpayer's bank account, wages, or other assets in order to collect the unpaid taxes.

Criminal Consequences

Criminal consequences of failing to file taxes can be more severe, and can include:

  1. Fines: A person who willfully fails to file a tax return can be subject to a fine of up to $25,000 for each year they don't file.
  2. Imprisonment: A person who willfully fails to file a tax return can be subject to imprisonment for up to one year for each year they don't file.
  3. Prosecution: The IRS can initiate a criminal investigation into a taxpayer's failure to file taxes, which can lead to criminal charges and prosecution for tax evasion.

In some cases, a taxpayer may have a valid reason for failing to file taxes, such as illness, natural disaster, or other extenuating circumstances. In these cases, it may be possible to request relief from penalties or interest from the IRS.

It is important to note that failing to file taxes is a serious matter and can have significant consequences. If you find yourself in this situation, it is recommended that you consult with a licensed attorney or tax professional for advice on your specific circumstances.