In this guide you’ll learn about: 


  • Penalties for not filing or paying taxes   


  • The possibility of tax evasion charges   


  • How to file old tax returns 


  • Payment options for back taxes 

Penalties for Not Filing or Paying Taxes 

The IRS has a lot of tools at their disposal for enforcing tax filing and payments. The highest penalties are for failure to file a tax return. The penalty is 4.5% of the total unpaid debt, charged monthly until it reaches 25% of the debt. 

Once it hits 25%, the penalty continues at 0.5% until the debt is paid in full. In the second month, the IRS can add a penalty of $210 or 100% of your total tax liability, whichever is smaller. 

If you didn’t file a tax return, the IRS may file a Substitute for Return on your behalf. Keep in mind, the agency files it as single or married filing separately. You will not receive the exemptions for married filing jointly or head of house that are yours. 

Failure to Pay

In addition to the failure to file penalty, you are assessed 0.5% of your tax liability for failure to file. The IRS adds the penalty monthly up to a maximum of 25% of your unpaid tax debt. It

isn’t as hefty as the failure to file penalty, but it still adds up. 

Combined, the failure to file and failure to pay penalties can eventually reach up to 47.5% of your tax bill. Not to mention interest accrual, which is typically between 3% and 5%.

Delinquent Returns 

To get back on track you must file six years of back tax returns. However, you can only claim refunds, if you are owed one, on the three most current tax years. 

At times the IRS requires returns from further back, depending on your situation.  

These situations often include the following scenarios: 

  • There is a large tax bill on your old returns 

  • Business returns are involved 

  • A revenue officer is assigned to the case 

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Tax Evasion Charges 

You can be charged with tax evasion if you’ve failed to file or pay taxes for several years. The possibility of jail time is slim, outside of extreme cases. 

What determines jail time depends on which law is violated, and the punishment depends on the value of the tax evasion. Your case will also depend on whether you: 

  • Have multiple counts of evasion 

  • Received income from criminal sources 

  • Used sophisticated techniques to commit a felony 

Some people receive probation for one to three years in extreme cases. If the terms and conditions of the sentence are violated, probation is extended. If you relied on a tax professional who failed to submit your taxes, and you can provide proof, you may be able to use that as a solid defense. 

How to File Old Tax Returns 

Once you decide to catch up on back tax returns you’ll need to get your records in order. 

You need to file the returns required for the tax years you skipped. The IRS keeps a tax database for all previous years. For each year you didn’t file, make sure you have your W-2, 1099s, or other earning statements. 

If you’re missing any information, request copies from the IRS. 

Payment options for back taxes 

If you haven’t filed or paid taxes in years, you may have a substantial tax debt, including penalties and interest. The good news is you don’t have to pay it all back at once. The IRS gives you several payment options for back taxes. 

Step one is finding out how much you owe. Keep in mind that unpaid taxes do accrue interest, penalties, and non-compliance fees. To get an accurate number on your total tax liability it’s best to contact the IRS rather than attempting to figure it out on your own. If you’d rather not deal with trying to contact the IRS you can hire a tax professional to work on your behalf. 

Offer in Compromise 

Although rare, if you qualify for an offer in compromise you’ll only need to pay a portion of your total liability. If you qualify, you may be able to request a first-time penalty abatement. The IRS will determine if your reasons for late filing and payment are valid. 

Installment Agreements 

If you don’t qualify for an offer in compromise typically an installment agreement is the next best thing to resolve your tax issues. The IRS offers both long and short-term installment agreements. The agency determines how much you can afford to pay each month based on your income and expenses. 

Work with a Tax Professional 

If you haven’t filed taxes in years the thought of starting the process can be overwhelming. There is a lot of paperwork involved and if you do it, you want to get it done right the first time and move on as quickly as possible. You also want to make sure you only pay as much as you have to under the law. Determining the best IRS debt relief program is not a straightforward process. 

A tax resolution company will evaluate your case and design a plan that gives you the best possible outcome in the shortest amount of time. They will communicate with the IRS on your behalf so you don’t have to worry about waiting on hold for hours and making sure your correspondence meets deadlines.  

The Tax Hardship Center Can Help You: 

  • File overdue tax returns 

  • Negotiate offers in compromise 

  • Set up installment plans 

  • Remove tax liens 

  • Remove tax levies 

  • Prevent the seizure of assets 

  • Stop wage garnishments 

  • Set up installment plans 

  • Defend tax audits 

If you have any questions about the IRS past tax filing process or would like more information about how we can help contact us today.