Tax Help Blog

If you don't file your taxes, are you a criminal?

Posted by HB Duran, EA on September 21, 2011 at 5:45 PM

Generally, the Internal Revenue Service does not consider non-filers to be criminals, per se, unless the reason is purely for the sake of refusing to file. As we all know (and of which we are constantly reminded), the country is in major debt. A huge part of this includes the national tax gap, which currently sits at approximately $345 billion. A whopping 10% of that is attributed to those who underreport their taxes or don't file at all.

Now more than ever, the IRS is doing everything they can to recover that lost income. Per IRS Publication 3861: Criminal Investigation - Legal Source Tax Crimes Program Strategy...

"One of the basic tenets of our tax system is the belief that all citizens must comply with the requirement to file returns and pay taxes. Taxpayers who willfully fail to file income tax returns pose a serious threat to tax administration and voluntary compliance. The non-filer population has been increasing throughout the decade. To address this concern, IRS has implemented a cross functional National Non-Filer Strategy. The overall goal of this strategy is to bring taxpayers back into compliance. IRS-CI's role in this program is the enforcement of the tax laws for individuals who are not responsive to outreach efforts."

"IRS-CI has devoted resources to identify these individuals, and in the most flagrant cases, criminal prosecution has been and wil continue to be recommended."


So, what if you got some bad advice, just came out of a tough time or were afraid to file because you owed money? The best advice I can give is to file, file, file - no matter what.

Some other great reasons to file your taxes:

  1. Failure to file penalties are far greater than failure to pay, so believe it or not you're saving money by filing even if you can't pay the balance.
  2. If you run into trouble, the IRS will not entertain ANY resolution until all your returns have been filed.
  3. The IRS can and will file a return for you - using the maximum amount of tax possible so it's NEVER in your favor. As soon as they do this, they can collect on that full amount. That can mean levies, garnishments, etc. for an amount you don't owe!
  4. If you want to get a loan of any kind, they will ask for verification of your income - impossible to do if your returns haven't beenf filed!
  5. If you continually fail to file your taxes, the State may assume that you are no longer in business and close your account. This can lead to a plethora of issues.
  6. All that money you had withheld from your paychecks? It's only good for 3 years. Wait longer than 3 years to file and you will owe that money again!
No one likes to pay taxes, and calling them "voluntary" is laughable - but the reprocussions for opting out to "voluntarily" file can be astronomical. 

If you are missing returns, don't delay - file them immediately to keep penalties and interest to a minimum. Check out our Links page for some tax preparers that we recommend. 

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