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This Is What Happens When You Just Don’t File Your Taxes

This Is What Happens When You Just Don t File Your Taxes Bloomberg Business


Every time a person gets a W-2, a 1099 or other tax form, the IRS gets a copy, and its computers analyze them to see who has failed to file. If you’re owed a refund (or refunds), the IRS doesn’t particularly care if you don’t file. After three years, though, you no longer have a right to your refund. The system does flag taxpayers when it's clear that they owe money, but even that can take the agency a few years to act on, says Jonathan Bochese of the Tax Defense Network. Tax documents triggered by a home sale, a loan or a stock transaction can pique the IRS's curiosity, too.


If you owe the government money, you'll have to pay it, plus interest and fines. If you owe money and don't file, the IRS charges a penalty of up to 25 percent of what you owe, and it can charge an additional 25 percent for failing to pay your bill on time. A 75 percent penalty is reserved for egregiously fraudulent returns, IRS guidelines say. There’s also interest to be paid, currently compounding at 3 percent per year. 

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25 percent penalty plus interest is worse than any credit card.

I'm surprised it's legal for them to charge that. 

Also you no longer have right to refund after 3 years?! What is that??

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