What do You do if You Didn’t File Your Taxes?

March 15, 2012 | Posted By: Jeff Fouts | Categorized in: Finance, Tax Advice & Tips
The time from January to April 15th (this year April 17th) seems like one of the fastest times there is. Not only are you stressed and working hard at your job or business, but somehow you have to find the time to file your taxes too.

Unfortunately, many people do not file their taxes at all, and some do not file their taxes for several years, fearing what the IRS may do to them as a result of their actions. Most people don’t forget to file their taxes, but usually they have one or more of the following events occur:

  • Some sort of catastrophic personal trauma
  • A business that goes bankrupt
  • A death in the family
  • A failed personal relationship

And now, you find yourself trapped in a sticky situation with the IRS – or perhaps they haven’t even noticed yet. However, you are still pretty frightened because you are not sure what is happening on their end.

The good news is that if you approach the IRS first regarding your non-filing status, the IRS attempts to make paying any tax liability you owe workable. If you approach the IRS first, they call you “voluntarily compliant.”

If you have been identified as being “voluntarily compliant,” the best thing you can do is to be honest with all of your further interactions with the IRS. The moment they sense any dishonesty on your part, they consider prosecution much more strongly.

If you want to be deemed “voluntarily compliant,” you must meet the following conditions:

  • Inform the IRS of each year you did not file your taxes
  • Approach the IRS before you face criminal investigation
  • Be cooperative throughout the entire process
  • Have income only from a legal source
  • Pay your full tax liability or arrange a payment plan

Filing your taxes late, even if it’s years late, is better than never filing them at all. You may also qualify for an “Offer in Compromise,” which forgives all or part of the taxes you owe.

What Happens if You Never File Your Taxes?

If you never file your taxes, you may very well never be caught by the IRS. However, your life will be very stressful. However, the other consequences are much more likely to follow:

  1. Forfeiture of any refunds owed to you in the past 3 years
  2. Increased interest and penalties on any amounts you owe
  3. The IRS files a return on your behalf, which is filed in the IRS’s best interest
  4. Criminal prosecution

Too Scared to do it on Your Own? Consult a Professional!

Facing the IRS on your own is terrifying. However, you don’t have to go it alone! Consider the services of a CPA or professional tax attorney. They have the experience and skills to get your situation resolved in the most favorable way.


About the Author: Jeff Fouts has helped many non-filing taxpayers negotiate favorable settlements with the IRS. If you need the help of an experienced tax professional, consider an experienced attorney.

Visit our Tax Software Deals on FatWallet!


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