Not Filing a Tax Return Can Get You In Big Trouble
You will have big IRS problems when you don’t file a tax return. The Tax Code has certain timelines or statutes of limitations set out that allow the IRS to pursue nonfilers.
Criminal: If you are found within six years of the date that the tax return was due, you’ll be facing criminal charges from the IRS.
Civil: Penalties and interest will be escalating on your tax debt forever because civil penalties can be demanded from you without a time limit.
IRS policy: The IRS does not usually pursue a nonfiler after 6 years from the filing deadline.
It’s a crime not to file a tax return, punishable by a fine of $25000 a year and a one-year prison sentence for every unfiled year.
There’s no criminal penalty if you owe taxes but filed your tax return. Your unpaid taxes will be assessed penalties and accumulate interest, however.
Nonfilers are pursued through:
- IRP or computerized Information Returns Program. Your information documents are matched against tax returns you’ve filed with the software. A TDI or Taxpayer Delinquency Investigation will be done if the IRS can’t find any indication that you filed a tax return. You will receive notices from the IRS, then telephone calls or even more letters, and finally a revenue officer will start searching for you.
- Nonfilers are contacted in 4 ways. If you do not respond to 1 method, the other methods will be tried:
- Written notice from Service Center – 3 within 16 weeks
- A taxpayer service representative will contact you and give you a deadline.
- Telephone call or visit from revenue agent or officer – deadline and offer of assistance to file your returns will be given (Note: It’s legal for the IRS to prepare your tax returns.)
- Visit from a special agent – subject to criminal investigation
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