Unfiled Tax Returns

What Happens If You Don’t File Taxes for 10 Years?

If you haven’t filed taxes in 10 or more years, you may have lost tax refunds, and you risk the IRS assessing income taxes against you. Luckily, in most cases, you can get caught up by filing just the last six years of tax returns. To help you out, this post explains what happens if you don’t file taxes for years and how to get back on track. 

Regardless of why you haven’t been filing your taxes, you should get back into compliance before the IRS brings collection actions against you. The tax attorneys at The W Tax Group can help you deal with unfiled returns. To learn what happens if you don’t file taxes and to get help now — contact us today.

Key Takeaways

• If you don’t file, you may face penalties, tax assessments, and collections. 
• You only have three years to claim a tax refund.
• The IRS can go back an unlimited amount of time to assess tax against you.
• Most taxpayers only need to file six years to get back into compliance.
• A tax attorney can help you reconstruct records and catch up on old returns.

What Happens If I Don’t File Taxes?

If you don’t file taxes, you may face the following consequences:

• Failure to file penalties – When you finally file, the IRS will assess a late filing penalty of 5% of the balance due, up to 25%. 
• Late payment penalties – Additionally, you’ll incur a late payment penalty of .5 to 1% of your balance for every month you were late, up to 25%. 
• Interest – The IRS will backdate interest to the original due date. The interest rate adjusts quarterly to the Fed Short Term Rate plus three points – 7% as of Q1 2025.
• Financial impact – You may struggle to get loans because many lenders want to see your tax return as proof of your income.
• Loss of retunds – You will lose your right to claim refunds for prior years. You can only claim refunds for up to three years after the due date.
• Substitute for return – The IRS may generate a tax return that generally reports all of your income but leaves out valuable credits and deductions. 
• Collection actions – Once the IRS assesses taxes against you, you may face liens, levies, garnishments, or other collection actions.
• Tax evasion charges – If applicable, the IRS may assess civil or criminal tax evasion penalties against you.

For example, say that you don’t file a tax return and you owe $10,000. If the late filing and payment penalties have both maxed out by the time you file, you will incur $5,000 in penalties, bringing your balance due to $15,000. There will also be interest on top of both the taxes and penalties. 

Now, imagine that you never file that return. Instead, the IRS files a substitute for return. Because the SFR doesn’t include all of your deductions, it shows that you owe $20,000. The IRS adds penalties that bring the balance to $30,000 plus interest. Then, the IRS starts involuntary collections, and you receive notices that your wages are going to be garnished and your assets seized.

What if my business doesn’t file taxes?

If your business doesn’t file business income tax returns, payroll returns, excise returns, or any other federal business tax returns, you will face penalties and interest. The IRS may also assess tax against you and collect it involuntarily. 

Additionally, if you don’t pay your state business taxes – for example, sales tax – your state may assess penalties and rescind your business or professional licenses. 

What if I’m self-employed and I haven’t filed taxes?

If you are self-employed with unfiled returns, you can use profit and loss statements to file your old returns. If you don’t have bookkeeping records, you will need to reconstruct your financials by going through old bank account statements, credit card statements, POS statements, and any other reports related to your business. 

Additionally, when you’re self-employed, you don’t get credit for Social Security or Medicare contributions until you file a return. In contrast, someone who is employed gets credit for those payments even if they don’t file because their employer pays those taxes on their behalf.

How far back can the IRS go on unfiled returns?

There is no statute of limitations on unfiled returns. If you haven’t filed a return, the IRS can go back to any time period and assess a tax against you.

However, once the tax has been assessed, the IRS only has 10 years to collect. The clock starts ticking when you file a return or the IRS assesses a tax against you.

Not Filing Taxes When You’re Entitled to a Tax Refund

If you’re not required to file a tax return, the IRS won’t take collections action against you, but you may miss out on credits or refunds. Some credits such as the Earned Income Tax Credit (EITC) and the Child Tax Credit (CTC) are available to taxpayers whose incomes are under the filing threshold.

Keep in mind that you only have three years to claim a refund. There is no penalty for filing late if you are due a refund, and the IRS will even add interest to your late refund. But if you don’t file within three years of the due date, you lose your chance to claim the refund.

In contrast, if you owe the IRS money, the agency has a decade to collect it. And there is no time limit for the IRS to assess a tax against an unfiled return.

What if I have unfiled returns but the current year shows a refund?

If you file a return showing a refund but you haven’t filed in previous years, the IRS may not release the refund immediately. To get the refund, you may need to file previous years’ returns or prove that you didn’t need to file for the previous years. 

The IRS often proactively keeps refunds of taxpayers who have unfiled taxes. That way, if the taxpayer owes from previous years, the IRS can apply the refund to those tax debts.

How Long Can I Go Without Filing Taxes?

Sometimes people with unfiled returns go undetected for years. In other cases, the IRS sends them a notice a few months after the filing deadline. Because there is no statute of limitations for unfiled returns, the IRS can theoretically go back an unlimited amount of time to assess tax against you. 

Is Not Filing Taxes a Crime?

In a worst-case scenario, not filing your return can lead to criminal tax evasion charges and even jail time. Note that this is relatively uncommon and only happens in cases of willful tax evasion. Willful tax evasion occurs when you purposefully don’t file your tax returns in an attempt to avoid paying taxes.

Civil tax fraud penalties can be 75% of the tax owed. Criminal penalties are even worse. If you believe that the IRS is considering criminal charges against you, contact a tax attorney for help as soon as possible.

What Should I Do If I Haven’t Filed Taxes in 10 Years?

If you haven’t filed taxes in 10 years, the IRS recommends that you file your tax returns as promptly as possible. To catch up on your returns, you can work through these steps.

1. Determine If the Six-Year Rule Applies to You

The IRS generally only requires taxpayers to file the last six years of returns to get back into compliance. However, this is a guideline, not a rule. Talk with the IRS or consult with a tax attorney to determine if you only need to file the last six years, or if you should file more or fewer years. 

Typically, the IRS will require more years if you have significant income or if you didn’t file due to tax evasion. In most cases, you will not be able to set up a payment plan or apply for other relief options until you have filed the last six years of returns.

2. Figure Out Which Years You Need to File.

Keep in mind that you don’t necessarily have to file every year. In most cases, you only need to file if your gross income is over the standard deduction for your filing status. For example, as of tax year 2025, single filers don’t need to file if their income is under $15,000.

You also need to file if you have more than $400 in net self-employment income, or if you owe special taxes such as the alternative minimum tax, early IRA withdrawal penalties, household employment taxes, or taxes on tips.

To determine if you need to file, check out the IRS’s Do-I-Need-to-File tool. The process takes about 12 minutes. You need your filing status, details about your income, and the amount of federal income tax that was withheld from your paycheck.

3. Find the Tax Forms for the Unfiled Years.

Tax rules, deductions, and credits change every year. To ensure you’re providing the IRS with the correct information, you need to use the correct tax forms for every year. You can often find the tax forms you need by doing a web search for the tax form and the year.

These forms should be available for free on the IRS’s website, and you can print them for free at most libraries. Do not pay to download them from other sites. Alternatively, you can call the IRS at 1-800-TAX-FORM or contact a tax professional to help you.

4. Gather Your Income Information.

To file your returns, you will need information about your income including wages from employers, self-employment income, investment income, and retirement income. If you don’t have copies of these forms, you can contact the payer. For example, your old employer may be able to provide you with copies of old W2 forms.

You can also set up an online IRS account to request wage and income transcripts. The IRS online account has wage and income transcripts for the last 10 years. If you ran a business or sold capital assets during any of the unfiled years, you may also need to gather information by going through old bank accounts and point-of-sale records.

5. Prepare and File Your Tax Forms.

Once you have the information and the tax forms, it’s time to start filling them out. You should be able to calculate your tax liability using the forms but keep in mind that is the amount you would have owed if you had filed on time.

Since you’re filing late, you will also need to pay interest and penalties. The IRS will let you know about these amounts once you have filed. A tax attorney can also help you estimate the penalties and interest.

6. Make Arrangements for Your Tax Liability.

After you have filed, you can try to request penalty abatement. The IRS often waives penalties for people who have reasonable cause for not filing. Then, you can either pay your tax liability in full or negotiate arrangements with the IRS. Here are the main IRS payment options:

• Installment agreement – Make monthly payments on your tax debt.
• Offer in compromise – Settle for less than owed.
• Partial payment installment agreement – Make payments on a settlement.

All of these options have different requirements and application criteria. Talk with a tax attorney to learn about the best option for your situation. 

What if I don’t have records to file old tax returns?

You can obtain the last 10 years of income and wage documents from the IRS’s website. Alternatively, a tax pro can help you obtain those records. 

Can I file taxes if I didn’t file last year?

Yes, you can file the current year even if you didn’t file last year. However, the IRS may not send out a refund until you file the previous years’ returns. You may also need to file previous years before you can set up payments.

Some tax pros advise clients who are behind to start with the current year and work backward. However, your tax pro will tailor their advice to your unique situation. 

How far back can I file taxes?

There isn’t really a firm limit on how far back you can go when filing back taxes. However, you can only claim refunds for three years after the deadline, and the wage/income transcripts are only on the IRS’s website for 10 years. 

Will the IRS forgive back taxes after 10 years?

The IRS cannot collect taxes more than 10 years after they are assessed. However, if you don’t file a return, the taxes are never assessed and thus, not subject to this deadline. 

Get Help If You Haven’t Filed a Tax Return for 10 Years

If you haven’t filed a tax return for 10 years or more, you don’t have to deal with the process on your own. We can help you. The tax attorneys at The W Tax Group have extensive experience helping taxpayers with unfiled returns get back into compliance with the IRS.

It’s always better to contact the IRS before they contact you. To get help, contact us today. We’ll start with a conversation about your situation and help you find the best and easiest way forward.