Staying on top of your tax filings is essential, not just for financial stability, but also to avoid potential legal trouble. If you’ve failed to file your tax returns for multiple years, it’s crucial to understand the serious implications that come with it. Ignoring your tax obligations can lead to a host of problems that might affect you financially, legally, and personally. Whether it was a case of forgetfulness or intentional avoidance, the IRS and the Pennsylvania Department of Revenue have strict measures in place for individuals who fail to file their tax returns.
The Legal Consequences of Not Filing Tax Returns
If you’ve failed to file your tax returns for multiple years, the first thing to know is that the IRS can take serious legal action. The government takes tax evasion very seriously, and if you deliberately avoid paying taxes, you can face criminal charges. In cases of intentional avoidance or fraud, you could be looking at penalties, fines, or even jail time.
The IRS has many ways to track down individuals who don’t file their tax returns. They receive information from third parties, such as employers and financial institutions, and cross-reference that data with your filing status. If the IRS notices discrepancies, they may begin sending notices and letters informing you of your non-filing status. Ignoring these notices only escalates the situation, and further action can be taken.
What Happens When You Don’t File Your Returns?
If you don’t file your tax returns for several years, the IRS will first notify you about the issue. However, if you continue to ignore their warnings, they may file substitute returns for you. These returns are filed based on the information the IRS already has, such as your income from employers or financial institutions. Unfortunately, these substitute returns rarely work in your favor. The IRS typically overestimates your income, which means you could end up owing more taxes than you actually would have if you filed on your own.
This results in a larger tax liability, along with penalties and interest that continue to build up over time. If you fail to pay this amount, the IRS has the authority to take further actions, such as garnishing your wages or placing liens on your property. Without a proper filing, you may find it challenging to resolve your tax debts fairly and quickly.
Professionalism is the Word
I highly Recommend Gibson & Perkins. I have used their services for approximately 6 years now and been through a few cases together with very positive outcomes. Personally, I have used Paul Fellman and Walter Timby on those occasions. Both, as a team & separately these Attorneys were wonderful to work with and easily accessible to reach if I had any questions. Professionalism is the word that comes to mind to describe the firm, as a whole. Always completely prepared for any surprises that may pop up during a trial. They were well versed on all pertinent info pertaining to each case. As I client, I always felt I was an integral part of the team, not an after-thought, that had to be brought up to speed a half hour before the trial started. I could not recommend this firm and Mr. Fellman and Mr. Timby any higher.
Very Satisfied
I hired Paul Fellman after speeking to several different lawyers from different law firms because he was the most sincere. Paul did an excellent job on my landlord tenant issue I had on my rental property. He was there for me from the beginning to the end of the whole ordeal. I was very satisfied and I highly recommend him and his firm.
The Penalties You Face for Not Filing
There are severe financial penalties for failing to file your taxes on time. In Pennsylvania, as well as at the federal level, the IRS will impose penalties if you fail to file your tax returns by the required date. One of the main penalties is the failure-to-file penalty, which is a percentage of the taxes you owe for each month the return is late. This penalty starts at 5% of your unpaid tax bill for each month the return is overdue, and it can increase up to a maximum of 25% of the total owed.
Along with the failure-to-file penalty, you may also face a failure-to-pay penalty if you don’t pay the taxes you owe by the deadline. This penalty is typically half a percent of your unpaid taxes for every month the balance remains unpaid. On top of the penalties, the IRS also charges interest on the outstanding tax balance, which can accumulate quickly and make it harder to pay off the debt.
The longer you go without filing or paying your taxes, the more the penalties and interest will compound, making your tax debt harder to manage. Eventually, this could lead to severe consequences, including liens or levies on your property, further legal actions, and potential wage garnishment. In cases where the IRS believes there was an intentional effort to evade taxes, criminal charges could even be pursued.
Related Videos
Hiring a Business Lawyer
Splitting From a Business Partner
How Unfiled Taxes Impact Your Property and Credit
Failure to file and pay taxes can affect more than just your financial standing; it can impact your property and credit as well. If the IRS places a lien on your property, they have a legal claim over your assets to recover the unpaid taxes. This means the IRS can seize or sell your property, such as your home, car, or other valuable possessions, to settle the debt.
In addition to the threat of a lien, unpaid taxes can also lead to a drop in your credit score. Once the IRS reports your unpaid tax liability to credit agencies, it can have a lasting impact on your credit. This makes it difficult to get loans or other forms of credit, and can even affect your ability to rent a home or get approved for a mortgage.
Resolving Unpaid Taxes and Missed Filings
If you’re behind on filing your taxes and are concerned about the consequences, the best course of action is to take steps toward resolving the issue as soon as possible. The IRS offers various programs and options for individuals who need help catching up on unpaid taxes. If you are struggling to pay your tax debt, the IRS might allow you to set up an installment plan, which will let you make payments over time. If you owe a significant amount, you might qualify for an Offer in Compromise, which could allow you to settle your debt for less than the full amount.
However, these programs aren’t automatic, and you must meet specific requirements to qualify. Working with a tax attorney or professional can make a huge difference in understanding your options and negotiating with the IRS to reduce your tax liability.
What Should You Do If You Haven’t Filed Your Taxes?
If you’re in a situation where you’ve missed several years of tax filings, it’s crucial to act quickly. Ignoring the issue will only make things worse over time. Here’s what you should do:
Start by gathering all your tax documents, including your W-2s, 1099s, and other forms that report income. The IRS and Pennsylvania Department of Revenue will want to see these documents when you file your back taxes.
Once you’ve gathered your documents, the next step is to file the missing tax returns. Even though they are overdue, filing them as soon as possible will show the IRS that you’re trying to make things right. The sooner you act, the less severe the penalties and interest will be.
If you can’t afford to pay the full tax bill, contact the IRS and ask about payment plans or other options for reducing the amount owed. It’s also wise to seek professional help from a tax attorney or an accountant to ensure you take the right steps and avoid missing any important details.
The Importance of Timely Filing
Filing your taxes on time is the best way to avoid penalties, interest, and other serious consequences. While the IRS may offer options for individuals who fall behind, these options are easier to access if you take the initiative and act quickly. The longer you wait, the harder it will be to resolve your tax issues and get back on track.
If you’re facing the consequences of multiple years of missed filings, it’s essential to seek professional assistance. A law firm like Gibson & Perkins, PC can help you navigate the complexities of tax law, ensuring that you understand your options and are taking the right steps to resolve your issues. With the right help, you can work toward getting back on track and reducing the stress of dealing with your taxes.
