Penalties for Not Filing Taxes

••• Creatas/Creatas/Getty Images

Taxpayers who are required to file a return are expected to file on or before April 15. Taxpayers who do not file their returns by the due date will incur enforcement action by the Internal Revenue Service (IRS). The severity of the enforcement action depends on a number of issues, including, but not limited to, the length of the time the return is past due, the amount of tax due for the year in question, and the interest rate for the period in which the tax is due.

Failure to File Penalty

A taxpayer who fails to file their return on or before the April 15th deadline will incur a penalty of 5 percent of the unpaid tax for every month the return is late, not exceed 25 percent of the unpaid tax. If you file your returns 60 days late the penalty is either $135 or 100 percent of the tax owed, whichever is smaller. There are no penalties for taxpayers who file late but owe no tax or are owed a refund.

Failure to Pay Penalty

For taxpayers who fail to file a return and owe tax, they will be assessed an additional failure-to-pay penalty in the amount of one half of 1 percent of the tax owed for each month the tax remains unpaid. The one half of 1 percent rate increases to 1 percent if the taxpayer fails to pay the tax 10 days after the issuance of an IRS Intent to Levy Notice.


Failure to file your income tax return and pay any tax owed by April 15 will result in interest being added to the tax owed. Interest on the tax owed begins to accumulate from the day the return was due and will continue to accrue until the day all tax and assessed penalties are paid in full. Calculation of interest is done on quarterly basis using the federal short-term rate plus 3 percent and is compounded daily. Check the official IRS website for the interest rates for the tax period in which you owed tax.

Substitute Return

A substitute tax return is filed on behalf of taxpayers if they met the filing requirements but did not file a return. The intention of a Substitute for Return (SFR) is to determine if tax is owed and, if so, begin collection efforts. The IRS does not include any additional deductions or credits for which you may be eligible to your substitute return. After the substitute return is filed and a tax liability assessment is made, the IRS will begin the collection process. The process may include placing a levy on wages and bank accounts or filing a federal tax lien against your property.

Tax Lien

A tax lien gives the IRS a legal claim to an individual’s property as security or payment for your tax debt. Before a tax lien is applied, the IRS assesses the liability, sends a demand letter to the taxpayer requesting full payment of the tax owed. If the taxpayer fails to fully settle the debt or make arrangements to pay the debt within ten days, a lien is issued for the amount of tax owed.


About the Author

Denise Caldwell is a finance writer who has been writing on taxation and finance since 2006. Her articles appear regularly on websites such as and She has taken what she learned while working at the IRS to provide readers with helpful tax and finance tips. Caldwell received a Bachelor of Arts in political science from Howard University.

Photo Credits

  • Creatas/Creatas/Getty Images