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Unfiled Tax Returns

April 1st is a dreaded day for any taxpayer. Just half of all taxpayers manage to prepare their tax returns and file them with the IRS prior to the deadline. The rest usually follow with a couple of weeks delay. Weeks sometimes turn into months and even years. The agency estimates that 10% don’t file their tax returns at all, though the real figures are much higher.

Of course, it’s a crime not to file your returns if you owe taxes to the government. Depending on the case, non-filers can pay interest on their due taxes, incur financial penalties proportional to the taxes owed and even serve jail time for severe tax evasion.

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The IRS delays but does not forget

Due taxes are owed forever and interest keeps running indefinitely

Nothing will happen if you don’t file your taxes on April 1st. Usually, the IRS will give taxpayers plenty of time to voluntarily submit their returns.

But just because you haven’t heard from them immediately, it doesn’t mean they have forgotten.

In fact, the IRS uses very sophisticated computer systems which collect and cross-reference information from various records and databases to find discrepancies between the income you receive and the tax returns you file.

The list includes, but is not limited to:

  • W-2 forms
  • 1099 income reports
  • Employers records
  • Credit report databases like Experian
  • Records of banks, credit companies, mortgage providers
  • Property and DMV registries

All of this happens automatically, in real time, for hundreds of millions of Americans. In this digital age, where information is increasingly being stored and processed by computers, your chances for outrunning the IRS forever are just theoretical.

Eventually, the system will recognize you’ve not filed your tax return and start sending you notices, asking you to comply. If you continue to ignore them, your case will be forwarded to an IRS employee which will take over.

If you fail to comply after numerous notices, letters, phone calls and even visits by the IRS, they can and will calculate tax for you. The agents will start with the information they have and guestimate everything else, usually missing numerous exemptions and deductions you would normally take into account. The result, more often than not, is a substantially higher tax figure in your name.

The consequences of not filing your tax returns

Criminal charges can only be brought up for tax returns in the past 6 years, meaning you will not go to jail. Either way, unless you owe millions to the IRS, the chances of them putting you behind bars in an already overcrowded prison system are slim.

However, taxpayers should know that there is no time limit (or mercy) for civil penalties. Due taxes are owed to the IRS forever. If the agency discovers you have not filed tax returns, they can slam you with a civil penalty in addition to the taxes you already owe, as well as interest up to date.

Depending on the case, penalties may be:

Filing late tax returns - civil penalty up to 25% of owed taxes.

Errors and discrepancies in tax returns - civil penalty up to 20% of owed taxes.

Intentional tax evasion and fraud - civil penalty of 75% of owed taxes.

Failure to file your tax returns AT ALL - 1 year in prison and a fine of $25,000 for each year you didn't file a tax return.

Filing a false tax return - felony conviction with up to 3 years in prison and a fine up to $100,000.

Lying to an IRS employee - up to 3 years in prison and a fine up to $100,000.

Criminal conviction of tax evasion and fraud - up to 5 years in prison and a fine up to $100,000.

That’s a financial nightmare. Depending on the case, it may drain your savings, put you out of business and even turn your whole life upside down. Obviously, you want to avoid such a scenario whatever it takes.

The good news is the IRS doesn’t treat everybody the same way. While usually uncompromising with the taxes and interest being owed, proper handling of the encounter can dramatically reduce the financial penalties imposed by the IRS. The agents will differentiate between unintentional failure to file a tax return, an honest mistake –  misrepresenting of facts, and a willful, knowledgeable, non-compliance with the law.

If you find yourself with a lot of unfiled tax returns with the IRS knocking on your door, we recommend you seek professional help. 


You don’t have to face the IRS alone!

Hunting years-old business records and preparing accurate tax returns is tedious and difficult. The impending threat of heavy financial burden makes the job ever so stressful.

At Daily & Toups, we’ve dealt with hundreds of unfiled tax return cases. With more than 50 years of experience, we’ve more than prepared to handle your defense and represent you in front of the IRS.

We have worked with the IRS to develop programs for their agents, as well as Enrolled Agents and certified CPAs.

We can perform a detailed audit of your business records, prepare and file your tax returns with the IRS. Furthermore, we can handle any complications that arise and will work our hardest to mitigate further financial penalties.

Contact us for a free consultation! We’ll look into your case and provide our advice and recommendations for moving things forward.

Our mission is to secure the best outcome for our clients. Where we can’t stop the IRS from imposing a penalty, we work to reduce the charges as much as possible.

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Hear from some of our clients

I've had the pleasure to work with Mr. Daily for over 20 years, and he has always found the time to counsel and explain the best course of action.

JG | tax law assistance and counsel

Mr. Daily helped me get out of a tax situation that could have forced the dissolution of my business and ruined my credit.

Anonymous | Representation and defense in front of the IRS

Fred assisted us through a multi year audit with ease and professionalism. His guidance was excellent and it was obvious he knew exactly how to handle the IRS

Richard | Multiyear tax audit defense

Thank you. Thank you. You got the tax lien removed and I was able to get my home re-financed.

Stephan | Removal of erroneous federal tax lien

Two years ago my finances (and life) were a mess. The IRS was on my back with tax levies of my bank accounts. Today, all of that is behind me. I can sleep at night.

Seraphina | IRS debt reduced from $200,000 to $14,700

The accountant that you warned me against tried to create endless fear as an incentive to hire him. You then helped me through the process of getting back into the tax system and not worry.

Sharon | 12 years non-filing of tax returns

Fred, I believe you function as part attorney, part therapist. You really do care about your clients.

David | IRS business audit appeal case