Why Unfiled Taxes Can’t Be Ignored

If you’re facing years of unfiled tax returns, what started as a single missed deadline has likely snowballed into a seemingly insurmountable problem. Unfortunately, unfiled taxes don’t just disappear and can result in serious consequences, including mounting penalties, compounding interest, and the risk of IRS actions like liens, levies, or wage garnishments. aq

Ignoring these issues can lead to long-term financial and legal trouble. Let’s go over the real costs of unfiled tax returns and why taking action now is critical.

The Cost of Ignoring Unfiled Tax Returns

Legal Risks of Unfiled Tax Returns

Failing to file your tax returns can lead to serious legal trouble:

Potential Criminal Charges

If the IRS determines you intentionally avoided filing, they may charge you with willful failure to file—a misdemeanor that could result in fines or even jail time.

Liens

A lien is a legal claim the IRS places on your property—like your home, car, or other assets—when you don’t pay your tax debt. This doesn’t mean the IRS takes your property right away, but it gives them a right to seize it if the debt remains unpaid.

Levies

A levy is when the IRS actually takes your assets to satisfy your tax debt. This could mean freezing and seizing money from your bank account, taking other financial assets, or even selling property you own.

Wage Garnishments

If you’re employed, the IRS can contact your employer and legally require them to send a portion of your paycheck directly to the IRS. Facing wage garnishment means less money for your day-to-day expenses, potentially leaving you struggling to cover basic bills.

Financial Risks of Unfiled Tax Returns

Unfiled tax returns can have serious financial consequences that grow worse the longer they go unresolved. Here’s how they can impact your finances:

The Compounding Nature of Tax Debt

When you don’t file your taxes, penalties and interest start adding up quickly:

• Failure-to-File Penalty: The IRS charges 5% of your unpaid taxes for each month your return is late, up to a maximum of 25%. This is on top of any taxes you already owe.
• Failure-to-Pay Penalty: If you don’t pay what you owe, the IRS adds an additional 0.5% of the unpaid amount for each month it remains unpaid, up to another 25%.
• Daily Interest: Interest accrues on both the tax amount and the penalties, compounding daily. This means what started as a manageable amount can balloon into an overwhelming debt in just a few years.

How Unfiled Returns Affect Future Financial Decisions

Unfiled taxes don’t just impact your IRS standing—they can disrupt your financial life in other ways:

• Damage to Your Credit: If the IRS files a tax lien against you, it will appear in your public records, making it harder to qualify for loans, mortgages, or credit cards.
• Loan Approval Issues: Lenders often require proof of filed tax returns before approving major loans, such as for a home or business. If you can’t provide them, you could be denied.
• Impact on Employment or Business Licenses: In some States, unfiled taxes can affect your ability to renew professional licenses or secure certain jobs, especially those requiring financial responsibility.

Ignoring unfiled returns doesn’t just hurt in the present—it can create long-term financial obstacles that make everyday life and future goals much harder to achieve.

Why Acting Now Is Crucial

When it comes to tax debt, the IRS has a long memory and sophisticated tools to ensure taxpayers comply with the law. Through data matching, the IRS cross-references your tax records with third-party information from employers, banks, and other institutions. If they find discrepancies or notice unfiled returns, they can take action.

One of their most powerful tools is filing a Substitute for Return (SFR) on your behalf. An SFR is the IRS’s way of estimating your tax liability, but it’s far from accurate—or fair. The IRS typically calculates your taxes without considering deductions, credits, or other benefits you may be entitled to, which often leads to inflated tax bills. Acting quickly to file your own returns can help you take back control and avoid paying more than you owe.

The Sooner You Act, the Better

Delaying only makes unfiled tax issues worse. Acting now helps you:

Stop Penalties and Interest from Growing

Filing halts failure-to-file penalties and slows the accumulation of interest, even if you can’t pay right away.

Keep Deductions and Credits

Filing lets you claim deductions and credits the IRS overlooks in an SFR, reducing your tax burden.

Restore Your Peace of Mind

The constant stress of avoiding the IRS can take a serious toll on your mental health. Filing your unfiled returns and starting the resolution process provides a sense of relief, knowing you’re taking steps to fix the problem and move forward.

It’s Not Too Late to Resolve Your Tax Debt

No matter how many years of taxes you’ve left unfiled, it’s never too late to take control. Facing the IRS alone can feel overwhelming, but professional help can make all the difference. Lothamer Tax Resolution’s licensed tax professionals specialize in navigating IRS complexities, handling aggressive tactics, and crafting personalized plans tailored to your financial situation.

When you reach out to Lothamer, you’ll speak directly with a tax expert who will guide you every step of the way. Don’t let tax issues hold you back any longer—contact Lothamer Tax Resolution today to start your journey toward financial health.

Overwhelmed By Your Tax Situation? Lothamer Can Help.

Since 1978, Lothamer Tax Resolution has been helping resolve tax issues for individuals throughout the Midwest, including Michigan, Missouri, Indiana, Illinois, Kentucky, Wisconsin, & Ohio. Our track record speaks for itself: We fight for the best outcome for our clients every time, no matter how complex the situation.

From unfiled tax returns to IRS audits, Lothamer has the expertise to set you free from your tax troubles so you can move forward with your life. Call us at 877-955-9020 or contact us online today to put your tax problems in the past.[/vc_column_text][/vc_column]