My name is Miranda Choke and I'm a CPA. This segment is about what happens when you don't file a tax return. Now let's hit the first stereotype, which is that the IRS will send you to jail. Now, there is a difference between tax fraud and not filing your taxes. We're talking about not filing your taxes here. According to the IRS's own statement on its website, the long-standing practice of the IRS has been not to pursue criminal prosecution of individuals who fail to file their taxes, provided they voluntarily file or make arrangements to file before they are informed of any kind of criminal prosecution. Now, let's talk about some of the more common consequences of not filing. Of course, penalties and interest will be calculated on the amount of your taxes due. Secondly, the IRS may actually prepare a substitute return for you based on the copies of the W-2s and 1099s that they've received from payers. Once they've calculated that amount, they will start the collection process, which may include garnishing your wages, garnishing your bank account, and sometimes putting a lien on any property you own, like your home. You may want to file on your own because your tax liability could be lower if you have information on deductions and expenses that you can deduct that the IRS won't have. If your tax liability turns out to be lower, the IRS will generally adjust your account to that lower amount. When you file and find that you have a tax refund coming, unfortunately, the IRS does not pay you interest on that portion. Again, penalties may accrue and it's anywhere from 5% to a maximum of 25% for filing late. Additionally, you have a late payment penalty that's anywhere from half a percent to a...
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