Unfiled tax returns are a serious offense in the eyes of the IRS and can lead to mounting debt as back taxes and fines pile up. The IRS will not stop the collections process until all unfiled tax returns have been filed and you have paid back all money due. If you continue to fail to file your taxes, the IRS could place a levy on your wages or take any of a number of other collection and enforcement actions, including things like seizing your assets or, in extreme cases, even require jail time.
In this video, Top Tax Defenders Director of Operations Priya Mishra explains how our professionals can help you gain compliance with the IRS.
When you don’t file your tax returns, several things happen:
*You may be able to request a penalty waiver.
If you have unfiled tax returns, the best way to stay out of trouble with the IRS is to immediately file your back taxes. Think that the IRS doesn't notice your unfiled tax returns? Think again. Even if it's been years since the unfiled taxes, the IRS can notify you at any time that they know and are ready to aggressively pursue back tax payments.
If you don't file, the IRS will generate a simple, substitute return, which will not include any credits, deductions, or exemptions you are entitled to. And it leads to a tax bill that can trigger the collection process.
Also, the IRS has targeted non-filers as one of its highest priorities. The agency typically goes after the big fish first, but don’t rely on the IRS ignoring your smaller profile.
Generally, you must file the previous six years along with the current tax return to get back into the good graces of the IRS. However, there is no statute of limitations on IRS collection and enforcement actions.
>>Click Here to Learn What Happens If You Haven't Filed Taxes in Years
More on those late penalties:
A failure to file penalty on any return that doesn’t have a tax debt associated with it is effectively zero. If you want your refund, you have three years to file the relevant returns to receive it. Any refunds from tax returns more than three years old are forfeited.
>>Click Here to Learn What Really Happens If You Don't File Your Taxes
You must file your tax return to claim the earned income tax credit, even if you are otherwise not required to file. Like refunds, you must file within three years of the return due date to receive the credit.
>>Click Here to See if You Qualify for the Earned Income Tax Credit
Before the IRS files a substitute return for you, it will send several notices in the mail requesting you to file your delinquent returns. If you don’t respond, the IRS can and will:
Even bankruptcy can’t stop many of the collection and enforcement actions the IRS takes.
If you willfully refuse to file, you can be charged with tax evasion. Tax evasion is any action taken to evade the assessment of federal or state taxes. Tax evasion is a federal crime that can net up to five years in prison for each offense.
At the least, you may receive one year for every year you neglected to file your income tax return. To be fair, the IRS usually only targets habitual non-filers of non-processable returns and tax protesters for criminal prosecution.
>>Click Here for 7 Things to Know About the IRS Collections Process
If you have IRS tax problems because of unfiled tax returns, Top Tax Defenders can help you. Top Tax Defenders boasts experience and expertise, including:
When working with Top Tax Defenders, here is the documentation you’ll need to provide to complete your tax returns:
>>Click Here to Read Real-Life Success Stories from Our Clients
If you don’t file your tax returns, the IRS may file a Substitute for Return (SFR) on your behalf, often resulting in a higher tax bill with no deductions. You may also face penalties, interest, wage garnishment, or bank levies until your returns are properly filed.
The IRS typically requires the last six years of tax returns to be filed to become compliant. However, this can vary depending on your situation, and older unfiled returns may still impact your tax liability or resolution options.
Yes. If you’re missing income documents, tax professionals can request your IRS wage and income transcripts. These transcripts provide the information needed to accurately file prior-year returns and avoid errors that could trigger further IRS issues.
Filing your unfiled returns is the first step toward stopping IRS enforcement actions. While it may not immediately stop collections, it allows you to qualify for resolution programs like payment plans or settlements that can halt aggressive collection efforts.
The IRS may impose failure-to-file and failure-to-pay penalties, along with interest that accrues over time. These penalties can significantly increase your total balance, which is why filing as soon as possible is critical to minimizing what you owe.
In many cases, penalties can be reduced or removed through programs like First-Time Penalty Abatement or reasonable cause relief. Eligibility depends on your compliance history and specific circumstances.
No. You do not need to pay your full balance immediately to file your returns. Once you’re compliant, you may qualify for options like installment agreements or other IRS resolution programs based on your financial situation.
The timeline depends on how many years need to be filed and the complexity of your situation. In many cases, tax professionals can prepare and submit multiple years of returns within a few weeks once all necessary information is gathered.
