Failure to pay your taxes adds another monthly penalty of 0.5% for non-payment to the unpaid amount. If you don't file your taxes for years, the IRS can take legal action against you. This may include filing a lien against your property or seizing your assets. In some cases, you may also be subject to criminal charges.
If you face any of these consequences, it's important to talk to a tax attorney or other tax professional as soon as possible. Unfortunately, those who fail to file a tax return on time can be charged with a crime. Penalties can include significant fines and even prison sentences. The penalty for not filing a tax return is 5% of unpaid taxes for each month or partial month in which the tax return is delayed.
However, the IRS will not charge a penalty greater than 25% of the unpaid tax amount. The IRS also charges interest on the penalty. If you incur both fines in the same month, the IRS will reduce the no-show penalty by the amount of the non-payment penalty. The IRS most likely filed a federal tax lien notice and tried to seize one or more of your assets.
If the IRS believes that you can owe for these tax years, you may have already received one or more notifications from the IRS. If you have employees or needed to pay sales taxes, you'll have additional business tax obligations. The most common reason people need to file a return is when they earn more than the standard deduction, which is also known as the income reporting threshold. You may receive notifications from the IRS about your tax liability in the mail, and the penalties and interest will continue to add to your bill.
You must file your tax returns for both tax years to ensure that the IRS cannot keep your tax refund check. For example, if you didn't file a return and paid your taxes for an entire month, the 5% penalty for failure to file would be reduced by 0.5% and only a net penalty of 4.5% would apply. A tax professional can guide you step by step through the process and help ensure that you don't miss out on any important details. You may think that there is no way to file all your back tax returns, let alone pay ten years of due taxes, plus penalties and interest.
If you earned sufficient income from a W-2 job or self-employment during the tax year, you should generally receive a W-2 or 1099 form reporting your income. However, if April 18 passes before you make your tax payments, a couple of different things can happen, depending on your status as a taxpayer. Unpaid tax is the total tax that must appear on your return minus the amounts paid through withholding, estimated tax payments, and allowable refundable credits. If the IRS decides to file charges, this must be done within six years after the due date of the tax return.
You can authorize a tax professional to call the IRS on your behalf for transcripts and information.