Unfortunately, those who don't file a tax return on time can be charged with a crime. Penalties can include significant fines and even prison sentences. If you won't be able to file your tax return before the deadline, you must request an extension to file it by submitting Form 4868 to the IRS before the deadline (usually April 15). The IRS rarely grants payment extensions, and they will only be granted if you can demonstrate excessive hardship.
The charges peak after five months, at which point the penalty for not filing the return is 25% of the unpaid tax liability. The penalty for non-payment is calculated at a rate of 0.5% of the outstanding tax liability for each month in which the debt remains unpaid, up to a maximum of 25%. The IRS will eventually send you a bill, but you don't have to wait to receive the bill to make additional payments. The IRS will only accept a PPIC if it's clear that the monthly payments you can make won't cover the total taxes due for many years.
At a certain point, the government will issue you a letter demanding payment of your outstanding tax balance. If you haven't filed a tax return in a few years, the IRS will extract your tax documents from those years and use them to calculate your taxes. Finally, you can contact a tax professional who can help you through the process of filing your tax return as soon as possible. However, if you don't file taxes, the statute of limitations for collection doesn't start running until the IRS makes an assessment of the deficiency.
Like managing the balance due on a credit card, these charges will make it more difficult to pay what you owe. If the IRS decides to file charges, it must do so within six years after the due date of the tax return. This is known as a replacement return, and the IRS uses it to assess taxes and initiate collection activities. Fortunately, the government has a limited time to file a criminal charge against you for tax evasion.
