1-800-548-4639After several years of not filing, it may seem easier to avoid the issue and hope it goes away. Unfortunately, the consequences of not filing or paying taxes continue to build throughout this period. While the Internal Revenue Service (IRS) will eventually stop seeking payment, it’s usually better to deal with the issue. Working with experts like BC Tax can help you with filing and finding ways to lessen the financial burden.
How It Impacts Your Finances and Life
Not filing taxes for 10 years can majorly influence your finances. The IRS imposes penalties for failing to file and pay. Besides penalties, the government charges interest, which accrues daily. You also miss out on any refunds that are three years old or more.
After several years without filing, the IRS begins to place levies, in which they legally seize property to satisfy the tax debt. This situation can affect many aspects of your life, including:
- Employment: Wage levies reduce your earnings at work. Liens are also public record, which means they could impact your ability to find future employment.
- Housing: Homes with a lien or levy might be harder to sell. If you haven’t paid tax for 10 years, it can be harder to secure mortgages for new homes.
- Retirement: Levies also apply to Social Security benefits, causing delays or withholding. The IRS may even take these benefits completely to cover debt.
- Travel: The IRS could deny, revoke or limit a passport in the case of “seriously delinquent tax debts.”
Can the IRS Still Pursue Old Tax Debt?
The IRS can still pursue old tax debt. If you’ve researched the topic, you may have discovered that the IRS has a regulation setting a 10-year Collection Statute Expiration Date (CSED). However, this rule has some stipulations.
The countdown begins when the IRS decides you owe, not when your return was due. The government determines that you owe when you file a return or when they file a substitute return. For example, if you haven’t filed taxes in 10 years, but the substitute return was filed five years ago, you still have five years until the IRS stops collecting.
Also, various actions suspend or extend the expiration date, including:
- Requesting an installment agreement
- Filing for bankruptcy
- Filing an Offer in Compromise
- Living outside the United States for six months or more
- Requesting a collection due process hearing
It’s important to remember that the IRS won’t give up on tax debt easily. As the deadline approaches, they often become more aggressive with their collection actions.
Potential Legal and Criminal Issues
If you’re wondering what happens if you don’t pay taxes for 10 years, understand that you could face criminal charges, though this is pretty rare. The IRS typically focuses on getting individuals to repay their debt rather than sending them to jail. However, a few potential criminal charges could include:
- Fraudulent failure to file: Not filing a return on purpose could lead to a year in jail for each return missed, plus a fine.
- Willful evasion: Deliberately avoiding taxes could result in up to five years in prison, plus higher fines.
Reclaim Your Life With Expert Support
If one year of missed filing suddenly turns into 10, you’re not alone. The situation is serious, but you can start to reverse the damage. It’s most often necessary to seek professional help, such as from the experts at BC Tax.
We help you file returns for the missing years. The good news is that the IRS generally maintains a six-year rule. In other words, you must only file the most recent six years to be considered current.
Our experts also help you find other ways to make the taxes easier to bear. For example, you might be able to file for bankruptcy for tax debt, as long as you have filed the returns.
Take the First Step Toward Relief
A future free of past-due filings and tax debt is possible with expert support. At BC Tax, we can help you with unfiled taxes and other situations you may face after 10 years. Reach out to us to get started today.
Authored by the BC Tax Insights Team, this article reflects the collective expertise and experience of our seasoned tax professionals. The Insights Team at BC Tax comprises specialists with a deep understanding of various tax scenarios and solutions. With a focus on providing informative, accurate, and practical insights, our goal is to guide readers through the complexities of taxation and financial planning. Every piece is crafted with the intent to help individuals and businesses navigate the ever-evolving world of taxes, ensuring clarity and confidence in decision-making.
