What will happen if I do not file my federal tax return?

If you are considering not filing your federal income tax return, you need to be sure you understand the repercussions first.  While the Internal Revenue Service (IRS) generally does not use the threat of a jail sentence to drive filing of federal tax returns, the IRS does take delinquent taxes seriously.  The IRS may garnish your wages or place a lien on your house.  In addition, there are other reasons for filing a return:

  • It is your responsibility. The federal government of the United States relies on money collected through the federal income tax system to run the country.  By residing in this country and enjoying the benefits and freedom provided by the government, you have a responsibility to pay your federal income tax to help provide those benefits to society as a whole.
  • It can reduce the amount of tax you owe. In cases where an individual does not file a tax return, the IRS can file a substitute return.  When the IRS files a substitute return, they do so with only the limited knowledge they have about your situation.  This may mean that the taxes you owe are based on a return that does not take into account the filing status and deductions that you are due.
  • It stops the bleeding related to penalties and interest. As noted above, the IRS does take delinquent taxes seriously.  If you choose not to file your federal tax return and do not respond to the IRS’ inquiries regarding the matter, they will file suit in an attempt to obtain a judgment against you.  This judgment can include penalties and interest in addition to the actual tax owed.
  • It is necessary to obtain any refund due to you. If you are owed a refund on your federal tax return, the only way to receive that refund is to file your tax return.

If you are considering not filing your federal tax return because you do not believe you can pay the amount of that you will owe, you should also remember that the IRS generally works with individuals who are up front about their financial situation.  It is in the best interest of the IRS to keep taxpayers in the system, so the IRS is generally willing to work out a payment plan or accept an Offer in Compromise.  As noted on the IRS’s web site at http://www.irs.gov/businesses/small/article/0,,id=104593,00.html, an Offer in Compromise is “an agreement between a taxpayer and the Internal Revenue Service (IRS) that settles the taxpayer’s tax liabilities for less than the full amount owed.”  So remember that you potentially have options in addressing your tax liability.

If you are considering not filing your federal tax return, should you hire a tax attorney?

At a minimum, you should have a tax attorney review your situation to get advice more specific to your circumstances.  A tax attorney understands federal tax laws and can answer your questions about your federal tax return and advise you of your rights.

Complete the short evaluation form found at http://www.offerincompromiselawyer.com/Tax-Relief.php and a tax lawyer will review your situation free of charge.  The review is 100% confidential and there is no obligation.  And remember: if you are considering not filing your federal tax return because you do not believe you can afford the tax amount due or for other reasons, you should seek the help of a tax attorney.  With the help of a tax attorney, it is not unusual to negotiate an Offer in Compromise or other settlement plan in which you pay less than the full amount of taxes owed.  So please seek help today.