If you didn’t file your taxes for more than 5 years, you may be facing a variety of different consequences. From interest on the amount you owe, to criminal prosecution, to civil judgment, and even a substitute for your return, you have to be aware of the ramifications of not filing your taxes.
Criminal prosecution
If you’ve been accused of not filing your taxes for five years, it’s very likely that you’ll be investigated by the IRS. Then, you can expect to be arrested and charged. However, if you hire the right criminal tax attorney, you’ll be able to mount a reasonable defense.
To be convicted of a tax crime, the government must prove that you committed the crime willfully. That is, you intentionally filed the wrong tax return or failed to file it.
This can be done through the IRS Criminal Investigation Division (CID). CID agents conduct in-depth investigations into people who have committed tax evasion. They look at a variety of factors, including the person’s age and physical health, previous crimes, and personality traits.
They may also contact former employers, bankers, or people with knowledge of financial affairs. After analyzing these factors, the CID recommends prosecution. It can take a year or more for a case to be developed.
Civil judgment
If you have been remiss in your tax filings, your tax refund might be on the chopping block. Luckily, you have options. You can take your chances with the IRS, or you can enlist the services of a third-party creditor. The trick is knowing what to do when the chips are down.
As for enforcing a court judgment, you can either garnish your wages or your bank account. Some states are more lenient on this than others. Whether you go the legal route or not, the best way to ensure your money goes where you want it to is to pay on time.
There are several things you should do, including preparing your paperwork in the proper order and using the proper terminology. When it comes to the IRS, they are stricter on this than you would think. For example, the IRS doesn’t allow a private creditor to intercept your tax refund. So, your best bet is to pay your taxes on time and avoid having your refund eaten by your creditor.
Substitute for return
What is a substitute for your tax return? The short answer is it is a real thing. You may be able to get in on an installment payment scheme, which allows you to spread out your payments over a longer period of time. If you want to take your own sweet time, you may need to file an extension.
There is a slew of powerful collection tools at the disposal of the IRS. From tax lien to collection notices, if you owe the IRS, you might be looking at some serious cash. Fortunately, there are many alternatives to get you back on track. One of the best is the Substitute for your Tax Return, which provides you with a secure online platform to file, pay, and track your taxes in a safe and secure environment.
If you are considering the dreaded IRS hammer, you can find peace of mind and a lower bill by signing up for an installment agreement. Alternatively, you can do what the name implies and file your own return.
Interest accrues on unpaid taxes
When you fail to pay your taxes, the IRS will charge interest. Interest is added to your balance every month until it is paid in full. It is based on the federal short-term rate and varies by a few factors.
If you’re unable to pay the whole amount immediately, you can try an installment agreement with the IRS. Many people take out these agreements, but they should be prepared to pay a certain amount each month. The interest and penalty rates on these payments are much lower than if you were to borrow funds from a bank.
You can use an estimated tax calculator from the IRS to estimate how much late payment penalties will cost you. These calculations are based on several factors, including the amount of time you’ve gone without filing your return.
If you’ve gone more than five years without filing your taxes, you may be required to pay a failure to file penalty. This penalty can be up to 25% of the unpaid taxes you owe.