In terms of filing taxes, the world can be broken into four basic groups. There are those citizens who happily pay every April because they believe it is their civic duty. The second group pony up, begrudgingly, because they are responsible Americans. The third class pays because they recognize the ominous power of the IRS. Lastly, there are those who do not file.

If you have not filed an annual tax return, it’s important that you address this problem sooner rather than later. Thumbing your nose at, arguably, the most powerful U.S. agency could have dire consequences. Call an experienced tax law attorney immediately and avoid being the subject of one of the following frightening scenarios.

Punishing Late Penalties

It would be an understatement to say that the Internal Revenue Service operatives through negative reinforcement.

For each passing day you owe the government money, that debt increases. Failure to make a tax filing will not stop the mounting fees and penalties. In fact, they are likely to be accumulating right now if your check is not in the mail. Consider these two scenarios.

• Failure To File: The late fees on unpaid taxes run 5-percent for each month they are outstanding. Those penalties max out at 25 percent. But the damage doesn’t stop there. If you fail to file or file more than 60 days late, the IRS could make you pay a penalty of 100 percent of the total tax liability.
• Filed But Unpaid: Sending in a completed tax filing is definitely a good first step. Unfortunately, the IRS won’t wave some penalties without a check for the full amount. You can expect to be charged interest at a monthly rate of 0.5, up to 25 percent. The unpaid taxes are basically treated like a short-term loan.

Reimbursements Withheld

Late filers can suffer a penalty they don’t see coming. The IRS can simply sit on your refund as a punitive measure. Because late filings are subject to penalties, those who have a refund coming can find themselves in a tough reimbursement spot.

While you might think the IRS will simply deduct late penalties, the agency can be particularly slow at sending you that long-awaited check. This type of administrative punishment is commonplace when IRS officials see a sketchy tax history. Withholding money shows the horrific power the IRS wields to punish tardy taxpayers.

Late Filers Lose Refunds

It may seem odd, but some individuals treat the IRS like a piggy bank. Although they have refunds coming, they delay filing taxes.

This idea that you have a federally-funded savings account doesn’t fly with the IRS. The agency will not hold on to your refund indefinitely. The government allows filers three years to claim any refund on the books. After that, you lose the money.

The scary part of that scenario is the IRS will put your refund down in its books as a “donation.” Try sleeping at night knowing you just made a “donation” to the IRS.

IRS Will Ghost File

The IRS is more than happy to file a return on your behalf, but it won’t be pretty.

The agency goes to great lengths to identify delinquent tax filers and prompt them to take action. But when they cannot find you or get no response, a bureaucrat will go ahead and fill one out. Needless to say, helpful deductions and items that lower your liability are unlikely to be considered.

What can happen is that the clock will start ticking on interest and penalties at the highest possible amount owed. This substitute filing can be grossly expensive. If you tried to side-step the April deadline due to lack of funds, the IRS could bankrupt you.

Scofflaws Could Go To Jail

Ignoring the IRS’ efforts to contact you about delinquent taxes can end in a nightmare.

For those that typically owe $25,000 or more, strong collections efforts are made. The agency often begins by garnishing wages, seizing assets and ultimately will have you arrested for tax evasion and other charges if the situation persists. Scofflaws rarely get over on the IRS.

The worst part of this IRS horror story is that you could be sitting behind bars while penalties and interest accrue.

If you have failed to file a tax return on time, call an experienced attorney. The last thing anyone wants is to fall under the powerful gaze of the IRS.