What Will Happen If You Don't File Your Past Due Return or Contact the IRS

It's important to understand the ramifications of not filing a past due return and the steps that the IRS will take. Taxpayers who don't file a past due return or contact the IRS are subject to the following:

• Penalties and Interest will be assessed and will increase the amount of tax due.
• The IRS will file a substitute return for you. But this return is based only on information the IRS has from other sources. Thus, if the IRS prepares this substitute return, it will not include any additional exemptions or expenses you may be entitled to and may overstate your real tax liability.
• Once the tax is assessed the IRS will start the collection process, which can include placing a levy on wages or bank accounts or filing a federal tax lien against your property.
• Even if the IRS has already filed a substitute return, it still makes sense for you to file your own return to make sure you take advantage of all the exemptions, credits, and deductions you are allowed. The IRS will generally adjust your account to reflect the correct figures.

If your issues are not addressed on this site, you can call the IRS toll-free at 1-800-829-1040, or visit tax topics.

What if I missed the April filing deadline?

If you're expecting a tax refund, there's no need to panic. You don't even need to file an extension.

2011 tax returns that are due a refund are given until April 15, 2015 (October 15, 2015 with an extension) to be filed with the IRS before the statute of limitations on the refund runs out. If you don't file by then, the U.S. Treasury simply keeps your "donation."

However, if you owe additional taxes, there is no statute of limitations. For this reason, try to file your income tax return as soon as you can. The longer you wait, the more interest and penalties are assessed on top of the money you already owe.

What to Do if You Can't Pay Your Federal or State Income Taxes

If you can't pay an unexpectedly large tax bill by the filing deadline, the IRS (and many states) will let you sign up for an installment plan. With an installment plan, you can pay off your taxes through regular payments, often via payroll deduction or by regularly scheduled debits from your bank account. File your return in a timely manner to minimize any additional penalties.

However, before requesting an installment agreement, you should consider other less costly alternatives, such as getting a bank loan or using available credit on a credit card. This is especially true if the interest and penalties imposed by the IRS would be more than the interest on your credit card or a bank loan.

Please note that installment plans do not waive additional costs associated with late tax payments, including:

• Interest on the remaining balance due;
• Late payment penalties and/or late filing penalties;
• Accumulated interest on unpaid late payment or late filing penalties.

Nevertheless, for some taxpayers, installment plans are a convenient way – sometimes the only way – to pay off overdue taxes.