What Are the Consequences of Not Filing Taxes?

 Posted on March 21, 2017 in Taxation Law

You may or may not know of someone who has not filed income taxes. It may be tempting each year to not file with the Internal Revenue Service (IRS); however, such an omission can lead to serious consequences.

California Filmmaker Josh Kornbluth was one of these non-filers. He did not file income taxes for seven years in the 1990s. He stopped filing taxes one year when his tax returns got more complicated after taking on freelance writing assignments. He said that he never got caught, which caused him to continue to not file.

"The first time, I got very nervous," Kornbluth told reporters. "But then I noticed that nothing happened to me. The next day after I didn't file was the same as the day before. It just became sort of a habit not to file."

Eventually, he realized that not paying his taxes meant that he was not supporting his country. He also got engaged and was expecting a child, leading him to make changes in his life. In the end, Kornbluth came clean and began to file. He chronicled his income tax experience in his film "Love & Taxes," which premiered in 2015.  

Not Filing a Tax Return vs. Not Paying Taxes

There are two issues with not filing that sometimes confuse people. One is not filing your income tax returns, and the other is not paying your income taxes. Oftentimes, individuals have both issues. Tax experts usually advise all U.S. citizens to file even if you cannot afford to pay. 

Will the IRS Find Me? 

Unfortunately, yes, the IRS usually finds you. This organization has amassed massive amounts of information on taxpayers over the years. Also, employers are required to send the IRS a copy of your W-2 form so that the IRS will be aware of your existence and income.

The IRS will typically contact you if you have not filed. They may file a return for you based on the information they have. This tax return may be far less favorable for you and will not take into account deductions you would be able to take. If you fail to pay based on this return, the IRS can put liens on property or garnish your wages. There are also penalties associated with not filing that go into effect on or before the day that the return is due in April. This penalty is usually 5 percent each month based on your owed taxes.

What If I Don't Owe Taxes?

If you know that enough taxes were withheld over the year, you might be tempted not to file. However, filing is still required. Additionally, you may risk losing your federal tax refund by not filing.

Contact a San Francisco Bay Area Tax Lawyer

If you have failed to pay your taxes for one year or more, you should seek help immediately. There are ways to remedy this problem, and we advise all clients to handle the problem head-on. Our firm helps many individuals with income tax issues. By hiring a tax attorney, you can feel confident that your tax problems will be resolved efficiently and correctly. To set up your first meeting, call knowledgeable San Jose income tax law attorney John D. Teter at 408-866-1810.

Sources:

http://www.reuters.com/article/us-money-taxes-kornbluth-idUSKBN1691X0

http://blog.taxact.com/what-happens-dont-file-taxes/