The IRS estimates that each year approximately ten million people fail to file their federal income tax returns.
The reasons that taxpayers fail to file their tax returns are varied; some taxpayers simply procrastinate; others don’t understand their filing requirement; and in a few cases, taxpayers willfully fail to file in an attempt to evade their responsibility to report their income and pay their tax liability.
The IRS uses the same term to describe all of these taxpayers, “Non-filers.” In most instances, the problems faced by Non-filers can be resolved successfully if the taxpayer obtains experienced legal counsel and voluntarily addresses the problem.
On the other hand, the continuing failure of a taxpayer to voluntarily comply with tax return filing and to obtain experienced legal counsel can result in severe consequences. In some cases, a taxpayer may even suffer a criminal tax prosecution
For many years, the IRS lacked the budget and the ability to identify and find habitual non-filers. However, the IRS has substantially increased its budget for technology that will enable it to find and pursue taxpayers who fail to regularly file their returns.
The IRS has targeted the problem of non-filers as one of its highest priorities. The IRS has developed and continues to improve sophisticated computer matching software programs designed to identify and locate these taxpayers.
IRS computer capabilities are constantly being improved to enable the IRS to match third party income and expense information to returns (or the lack thereof) of taxpayers, and the IRS is becoming increasingly adept at identifying and locating non-filers.
If you have not filed all required tax returns, and have not yet been discovered by the IRS, the time to act is now. If you fail to act now, the IRS is almost certain to knock on your door in the future. It is a misdemeanor to willfully fail to file your tax return. This could lead to a one-year maximum sentence. If charged with the felony of tax evasion, you may face five years of imprisonment. It is not worth taking that chance.