What is the Penalty for Failure to File a Tax Return?

Avoid stress by paying your taxes on time.

For the average adult American, few dates are looked upon with more dread than April 15, but following the law and filing your tax returns can save you a giant headache. If you fail to file your returns, you might face financial penalties, including not just the taxes owed but also fines and court costs. In addition, you run a larger risk of being convicted of a criminal act and incurring jail time, which will increase your financial woes.

Requirements

Mark your calendar.

The deadline for filing your tax return and paying your tax is April 15 or the following business day if April 15 falls on a weekend or business holiday; however, the Internal Revenue Service (IRS) will grant an automatic two-month extension if you request it, which can be expanded to six months under the right circumstances. Regardless of your extension request, you must still pay an estimated tax owed by April 15 or make other arrangements with the IRS.

Financial Implications

Depending on your income, you may not have to file a tax return.

The penalties for not filing a tax return can be severe. For tax returns filed after 2008, the minimum penalty is $135 or 100 percent of the unpaid tax, whichever is smaller, and a fine of up to $25,000. This means that if your unpaid tax was $140 and you failed to file your tax return, you will be required to pay up to $25,275 ($140 in unpaid tax, $135 in penalty and $25,000 in fines), and that's just for the one year you missed. If you failed to file for multiple years, the potential penalties increases.

Other Penalties

Don't file, and you might go to jail.

In addition to the financial implications, you may also incur criminal penalties as a result of your failure to file. According to U.S. Code Title 26 Section 7203, if you are convicted of misdemeanor tax evasion, you can be sentenced to up to one year in jail for every year that you failed to file a return. You will also be responsible for any court costs resulting from your conviction.

Statute of Limitations

From a civil perspective, there is no statute of limitations on failure to file your tax returns. This means you will be liable for any unpaid taxes and penalties for as long as the taxes are due. However, there is a six-year statute of limitations on the criminal offense.

Requirements

In some cases you may not actually need to file a tax return. For 2009, if you were single and under 65 years old as of December 31 and you made less than $9,350, you do not need to file a tax return. Or if you were married, both spouses were under 65 and your gross income for the year was less than $18,700, you also don't need to file a tax return. However, you may need to file one to get a reimbursement.

References

• IRS: Publication 17
• IRS: "Penalty for Failure to File Income Tax Return Increased"