What Happens if You Don’t File Your Taxes?

Every year, millions of Americans miss the tax filing deadline—whether from confusion, fear, or simply being overwhelmed. But while procrastinating on taxes may feel like a short-term solution, failing to file your return can lead to serious and long-lasting consequences.

From mounting IRS enforcement actions to lost refunds and credits, unfiled tax returns create financial burdens that grow more severe the longer they’re ignored. Fortunately, resolving unfiled taxes is possible with the right support.

In this article, we’ll walk you through the risks of not filing, common reasons people fall behind, and how expert help from Lothamer Tax Resolution can make a difficult tax situation manageable.

Consequences of Not Filing Taxes

Penalties and Interest Begin Immediately

One of the most immediate consequences of not filing is the Failure to File penalty. The IRS imposes this penalty at a rate of 5% of your unpaid tax for each month your return is late, up to a maximum of 25%. If your return is more than 60 days overdue, you’ll also face a minimum penalty—either $485 or the total amount of taxes owed, whichever is less.

But that’s just the beginning. The IRS also applies a Failure to Pay penalty, typically 0.5% of the unpaid tax per month, also capped at 25%. These penalties stack over time, and if both apply in the same month, the combined penalty reaches 5%.

In short: the longer you wait, the more you’ll owe. Interest accrues daily, and the IRS doesn’t forget.

IRS Enforcement Actions

If your unpaid tax and unfiled returns go unaddressed, the IRS will take action to collect. IRS enforcement may start with mailed notices, but it can quickly escalate to:

• Federal tax liens – legal claims placed against your property
• Bank account levies – seizures of funds directly from your bank
• Wage garnishment – a portion of your paycheck withheld until the debt is paid
• Asset seizures – from cars to homes, nothing is off-limits if the liability is large enough

In rare but serious cases, criminal charges may be filed for willfully failing to file. The consequences of tax evasion can include hefty fines or even jail time.

Loss of Refunds and Credits

Many people assume they’re safe if they expect a refund—but that isn’t always true. If you don’t file within three years of your tax year’s due date, the refund amount paid to you is forfeited. The IRS gets to keep it, no exceptions.

Worse still, you may miss out on tax credits like the Earned Income Tax Credit, Child Tax Credit, or education-related credits. These valuable benefits can significantly reduce your tax liability or increase your refund, but they must be claimed on time.

Failure to file also affects your eligibility for Social Security credits, particularly for self-employed individuals. Without proof of income, you may lose retirement or disability benefits down the line.

Common Reasons People Don’t File

At Lothamer Tax Resolution, we understand that unfiled returns aren’t always about negligence. Many clients we’ve helped across the Midwest fell behind due to reasons like:

• Fear of a large tax bill: Some assume they can’t afford what they owe and try to avoid the situation altogether. In reality, filing is always better than hiding—even if you can’t pay in full. IRS options like installment agreements or estimated tax payments can help manage the burden.
• Major life changes: Divorce, medical crises, job loss, or the death of a loved one can derail even the most organized taxpayer. When life gets in the way, taxes often fall to the bottom of the list.
• Confusing income situations: Freelancers, gig workers, and self-employed individuals may not realize they’ve crossed the income threshold. Others assume they don’t owe anything and skip filing altogether—often missing out on a refund or tax credit.
• Lack of documentation: If records are missing or disorganized, some delay filing out of fear they’ll get it wrong.

No matter your reason, the IRS sees failing to file as a serious issue. But there’s no shame in needing help—especially when that help comes from licensed professionals who specialize in resolving complex tax issues.

How Lothamer Tax Resolution Can Help

At Lothamer Tax Resolution, we’ve been helping people resolve unfiled taxes and other complex IRS problems since 1978. Our mission is to lift the burden of tax debt so you can regain control of your financial future.

Expert Negotiation and Representation

Our team of Enrolled Agents and licensed tax professionals works directly with the IRS to reduce penalties, negotiate payment plans, and advocate on your behalf. We’ve handled thousands of cases involving unfiled returns, taxes owed, and IRS liens. Whether you’re behind by one tax year or ten, we have the expertise to move your case forward.

Personalized Solutions for Significant Tax Debts

There’s no one-size-fits-all solution for resolving unfiled taxes. That’s why we begin every engagement with a detailed financial review. We consider your full tax situation, from your current income and assets to any prior IRS communications.

Depending on your case, we may recommend:

• Filing your tax returns for all missing years to establish compliance
• Penalty abatement requests to reduce or remove fees
• Installment agreements that spread out what you owe
• Offers in Compromise to settle for less than the total amount
• Or a combination of options to provide relief while protecting your assets and bank account

We also work with clients using financial services that may offer funding or credit options based on eligibility criteria and underwriting, helping to cover part or all of their tax resolution plan.

Preventing Future Tax Issues

Once we’ve resolved your past due returns and debts, we don’t leave you hanging. Our team provides ongoing guidance to help you stay current, including setting reminders for the due date of your return, calculating estimated tax payments, and reviewing income changes that may impact your tax liability.

We empower clients with education and tools so that next year’s taxes are never a source of panic.

Why You Should File Now—Even If You Can’t Pay

It’s a myth that you must pay in full to file. In reality, the IRS is far more lenient with people who are proactive.

Filing your return—even if you can’t pay right away—helps you avoid the harshest failure to file penalty, preserve your refund amount paid, and start the clock on your resolution. It also gives you access to relief options and positions you more favorably for negotiations.

Every day you wait increases your penalties, interest, and stress. But every day you act brings you closer to peace of mind.

The First Step Toward Resolution

Whether you’re dealing with one year of unfiled taxes or a decade’s worth of financial chaos, Lothamer Tax Resolution can help. We’ve seen every kind of case and helped clients from all walks of life—business owners, retirees, single parents, and more.

We offer a free, confidential consultation to evaluate your situation and outline the best steps forward. We don’t judge. We just get to work—fast.

Call us today at 877-955-9020 or visit us online to start resolving your unfiled tax returns.