It’s important to understand the ramifications of not filing a past due return and the steps that the
IRS will take. Taxpayers who don’t file a past due return or contact the IRS are subject to the
following:
Penalties and Interest will be assessed by the IRS. The amount of tax you owe will then
be increased.
The IRS will file a substitute return for you. But this return is based only on information
the IRS has from other sources. Therefore, if the IRS prepares a substitute return, it will
not include any additional exemptions or expenses you may be entitled to and may
overstate your real tax liability. Resulting in the amount owed being much greater.
Once the tax is assessed the IRS will start the collection process, which can include
placing a levy on wages or bank accounts or filing a federal tax lein against your
property.
Even if the IRS has already filed a substitute return, it still makes sense for you to file a
return of your ownto ensure you take advantage of all the exemptions, credits, and
deductions you are allowed. The IRS will generally adjust your account to reflect the
correct figures.