What Happens if I Don’t File My Taxes? Exploring Penalties and IRS Consequences

Nobody likes tax season, but if you are thinking about skipping it altogether, you might want to reconsider. The IRS doesn’t just forget about unfiled tax returns. Ignoring your taxes can lead to penalties, growing interest fees, and even legal troubles. Whether you missed the deadline by accident or you were intentionally avoiding filing, there are some consequences you should know about.

If you find yourself wondering what happens if you don’t file your taxes — you aren’t alone. It’s a responsibility that a lot of people think about skipping out on. Keep reading as we break down everything that might happen if you decide to skip out on tax season.

If you don’t file your tax return on time and you owe money, the IRS issues a failure-to-file penalty. This penalty starts at 5 percent of the unpaid taxes for each month your return is late, maxing out at 25 percent. The longer you wait, the worse it gets. If your return is more than 60 days late, the minimum penalty jumps to either $510 or 100 percent of your unpaid tax bill, whichever is lower. That means even if you don’t owe much, you could still face a hefty fee just for being late.

Now, if you are owed a refund (meaning the IRS owes you money), they won’t penalize you for not filing. There’s a catch, however. You have a deadline of three years from the original due date to submit that return. Otherwise, you will lose the refund entirely. The government will keep the money, and you can no longer claim it as your money.

On top of penalties, the IRS adds interest to whatever you owe. This interest will keep accruing until you pay your balance off in full. The interest rate is adjusted quarterly but is generally the federal short-term rate plus 3 percent. Unlike penalties, which have limits, interest doesn’t stop accumulating. That means a small unpaid balance can grow into a much larger debt over time.

This is where people often get into trouble. Ignoring a tax bill for months or years can turn what was originally a manageable amount into something overwhelming. The IRS may also take collection actions, like garnishing wages or seizing assets, if a debt goes unpaid for too long.

Most of the time, the IRS just wants people to file their returns and pay what they owe. In extreme cases, not filing could lead to legal consequences. Willfully avoiding taxes —especially if large amounts are involved — can result in criminal charges. Tax evasion is a felony that carries penalties of up to five years in prison and a $250,000 fine, per multiple legal experts.

That said, most people don’t end up in court over unfiled taxes. The IRS is more likely to take financial action first, such as filing a substitute return on your behalf. When this happens, the IRS doesn’t include deductions or credits that could lower your tax bill, so you might owe more than if you had filed yourself. They may also issue liens against your property or freeze bank accounts to recover unpaid balances.

If you missed the tax deadline, the best thing to do is file as soon as possible. Even if you can’t afford to pay the full amount, submitting your return stops the failure-to-file penalty from increasing. The IRS also offers payment plans if you need extra time to pay off what you owe.

If you’re really behind on filing, it may help to speak with a tax professional. They can guide you through the process, help you reduce penalties, and work with the IRS to find a resolution. The worst thing you can do is ignore the problem, because the longer you wait, the more difficult it becomes to fix.