What Happens After Not Filing Taxes for 10 Years

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Without proper attention, it can be easy to fall into the rabbit hole of not staying up to date on your taxes. 

Life happens; and whether it was a death in the family, an unforeseen illness, or another life-altering instance, certain circumstances can distract you from filing.

However, if not corrected, these actions can warrant dire penalties and more serious legal action against you.

Not filing taxes for 10 years can heighten these offenses and the IRS may take action against you, here are a few consequences to not filing, if it’s never corrected.

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Results of Not Filing Taxes for 10 Years

Before diving into the long term consequences, let’s weigh out the short term ones that can affect your everyday life.

Buying a house becomes nearly impossible if you don’t file, as that is a prerequisite to applying for loans and is an immediate red flag to your account.

Certain things such as healthcare, financial aid (for you or your kids), and applying for a passport requires you to have filed as well.

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They Will Come for You Eventually

If the IRS and tax agencies haven’t reached out to you in reference to your unfiled tax returns, you might think that if they were going to reach out, they would’ve done so by now.

The reality is that the IRS doesn’t have a time limit to collect taxes if you never filed. 

In fact, you’re only protected by a time limit if you file your taxes, at which point the IRS only has 10 years to collect from the date you filed.

Tax agencies’ time limit is specific to the state, so depending on where you live, it could be less or more than 10 years for them to collect.

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You Could Go to Prison

This is perhaps the most daunting consequence of not filing your taxes.

Should you fail to do so, there will be legal action taken against you in the form of tax evasion charges, which can result in up to 5 years in jail and $100,000 in fines.

It’s a common misconception that the IRS wants you to “pay for your actions”, instead, the IRS would rather work with you to get things rectified. 

Still, the IRS can file charges up to three years after you file your taxes. Needless to say, it’s in your best interest to file all your taxes and cooperate with the process.

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Interest on Your Taxes Will Keep Climbing

As soon as the original due date has passed, interest will be charged on all the taxes you haven’t paid. 

Having 10 years worth of unpaid taxes will result in a significant amount of interest that has piled up.

In some cases, you can be charged up to 100% of late taxes 60 days after their due date, so letting that number increase will keep the interest stockpiled as well.

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The IRS May Have Filed a Substitute for Return for You

Sometimes if you didn’t file your return by the due date, the IRS may have filed one for you.

This isn’t a return that will work in your favor, however, as you won’t be granted deductions and exemptions that a tax attorney would find for you. 

This is essentially a way for the IRS to claim your responsibility and start to collect. 

The good news is that you don’t have to accept an SFR if one was filed on your behalf. 

You can refile down the line to accept the proper deductions and lower the amount you owe as well.

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How Can You Take Action?

In this case, it’s better late than never. Filing your missing returns can begin the process of restoration.

We highly recommend that you speak with a tax attorney before beginning this process, so that they can advise you on the correct steps to take.

While it can be overwhelming to stare 10 years worth of unfiled returns in the eye, this is also a way to protect valuable assets to you such as social security benefits.

This is especially important when you’re self-employed and need credit towards retirement.

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Negotiations Can Be Made

As previously mentioned, the IRS is willing to work with you on repaying your taxes and not looking to push you out of financial stability to do so.

There are several options such as abatement requests (Form 843), payment plans (PPIC), and an Offer In Compromise (OIC) that have been created to help lower the full amount owed.

Past circumstances can also help lower the total and help rid of penalties. Personal instances such as Alcoholism, Mental Disabilities, Military service, or death of a loved one would run under this category.

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Admit Your Mistakes and Cooperate

After 10 years of not filing, it’s time to lower your pride and own your mistakes.

Once you do that, make it a priority to stay in touch with the IRS, as this will prove your willingness to comply. 

Certain reasons have held you back from filing for years now, don’t let those hold you back from doing the right thing and cleaning the slate.

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You’re Not Alone in This Fight

It’s frightening to negotiate with an all-encompassing organization like the IRS, but realize that you don’t have to go it alone.

Even after not filing taxes for 10 years, we at the Silver Tax Group can help you solve your tax issues and start on the right path to tax repayment today.

For more information on where to start, please feel free to contact us at 855-491-2224

Managing Partner of Silver Tax Group, author of the book “Stop the IRS”. Practicing a variety of tax issues, regulations, laws and rights. Specializing exclusively on tax matters involving IRS audits, negotiation, settlements & compromises.

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