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The Penalty for Not Filing Taxes

Failure to File a Tax Return

When you think of penalties for not filing taxes, you likely think of the charges associated with failing to get your tax return in. But the cost is far greater than simply additional fees tacked on by the IRS. As you consider, “what is the penalty for not filing taxes”, consider the problems you face – monetary and personal.

Immediate Cost

From a financial standpoint, the penalty for not filing tax returns can be costly. The IRS assesses not only a punitive charge, but also interest for failure to file tax returns (interest accrues on any liability not paid by the filing deadline). These charges can quickly inflate the total you owe and they’re difficult to get removed. But, when you ask, “Is there a penalty for not filing taxes?” you have to weigh the costs that reach farther than additional charges.

The Big Picture Failure to File Tax Return Penalty

What are the penalties for not filing your taxes? Beyond the extra money you will pay, the IRS can ultimately file your return for you. This is known as a Substitute for Return (SFR) and fills in the gaps left by returns you failed to file. “What are the penalties for not filing taxes” can quickly lead to, “how much do I owe the IRS from their standpoint?” and “what collection actions can I expect?”

The IRS has powerful collection tactics. In fact, the “not filing taxes” penalty may ultimately be a wage garnishment or a bank levy on your checking or savings account. And while these actions aren’t defined by the IRS as a penalty, not filing taxes can lead to such collection efforts (an internet search for “what is penalty for not filing taxes?” won’t necessarily bring up these points).

The most severe penalty if you fail to file tax returns, though, can lead to jail time. Failing to file tax returns is actually illegal and punishable with imprisonment for each year that is unfiled. The IRS may not pursue this legal recourse, but it’s also not outside the realm of possibility.

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How to Protect Yourself

If you’re simply running a little behind on getting your return in, just get it filed and pay the relatively cheap penalty. On the other hand, if your failure to file a tax return has led to aggressive IRS collections – or you have several years that still need to be filed – don’t address the situation on your own. Before you file, contact a licensed tax professional.

A tax resolution company, such as Tax Defense Network, LLC, can offer you a no-cost consultation to review your tax problem. Negotiating a fair resolution with the IRS can be tricky, not to mention time consuming, and may be best left to a seasoned professional. You can head off any action the IRS may consider taking by getting in front of the problem with someone who knows how to fix it. There’s no tax penalty you can’t address without a little professional insight.

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