Last year, 2,105 criminal tax convictions were made and 1,810 taxpayers were incarcerated. Although civil penalties are normally assessed, if the IRS discovers a habitual non-filer before voluntary disclosure, either through its own non-filer programs or through an informant, the IRS will often refer the matter to the Criminal Investigation Division (CID) to determine if criminal prosecution is warranted.
Failing to File a Tax Return can be a misdemeanor. Normally civil tax penalties are assessed, instead of criminal. However, if charged, you could face up to 1 year in jail and $25k in fines for each year you failed to file. One thing to note is that you can only face criminal charges for not filing a tax return (with civil penalties there is no time limit) if it was due no more than six years ago.
More commonly, in cases where returns are not filed, the IRS will file Substitute for Returns (SFR); essentially the IRS prepares and files for a tax return based on what it knows. The IRS won't consider all the tax benefits (e.g., deductions and other credits) you might otherwise be entitled to claim. Once filed, the IRS will proceed to collections. Remember, not filing is one thing. Not being able to pay is another. There are numerous options for dealing with not being able to pay the IRS.
There are many reasons why taxpayers fall behind on filing. Some people just get into a bad habit and year after year passes and they put off the expense or the work of reconstructing all their records, or they are simply afraid. However, this problem won't go away.
I strongly suggest you and your husband go see a tax attorney that has experience dealing with non-filers and who can assist you with correcting the problem before it gets worse.
Best of Luck.
The posting attorney is admitted to the U.S. Tax Court and authorized to represent clients in all 50 states before the IRS. Outside of IRS matters, the posting attorney is licensed to practice law generally in the State of Texas and no other state. The information provided in this post is for general educational purposes only and should not be relied upon as legal advice by any party. No attorney-client relationship is formed with any party by the mere posting (or reading) of this information on the AVVO website.
Circular 230 Disclaimer - Advice given in this response cannot be used to eliminate penalties with the IRS or any other governmental agency
The answer by Mr. Stoltz was right on point. I would, however, add the following, If the taxpayer willfully fails to file a tax return and pay the resulting tax liability, the taxpayer may be charged with a felony and subject to a jail term of up to 5 years, in addition to other penalties, in certain cases involving cash transactions related to business returns (See Sections 7203 and 6050I of the Internal Revenue Code). Also, the normal three year statute of limitations (for purposes of assessment) does not begin until the return is filed. Therefore, an assessment can be made at any time when a return has not been filed. Remember, there are two different statutes of limitations that apply here. There is the typical three year assessment period after the return is filed and the six year criminal prosecution period for willful failure to file.
Failing to file is playing with fire. I would strongly urge you to contact a tax lawyer.
You have a complicated situation. As Texas is a community property state, your and your husband's tax returns are linked: 1/2 of all items of income and deductions from your husband's finances belong on your return and 1/2 of all items of income and deductions from your finances belong on your husband's return. For this reason it is difficult for either spouse in a community property state to file an income tax returns without all the necessary tax information for both spouses.
Given your husband's uncooperative posture, I suggest you talk with a tax lawyer or CPA to guide you through the options available to you. I realize that is why you posted your question here, but there are too many facts and issues that must be considered and analyzed before you could receive appropriate advice.
This is the stuff of nightmares. He HAS to start filing. Some statutes of limitations are a good thing, like the 3 years to examine a return that pass after a return is filed. It doesn't start until a return is filed. You have to examine what his refusal to file is doing to you, to your marriage and your future. At a minimum, see a CPA or tax attorney to look at options for you both.
If you cannot afford an attorney, look for a local Legal Aid or other low income legal services group. Or, use the AVVO.com web site to find an attorney in your area. In addition to that, contact your local bar association for referral to an attorney who specializes in this or talk to friends and neighbors to ask about an attorney they have used and liked. Often, but not always, the attorney will do an initial consultation free of charge. You will then be in a better position to determine what to do next. Best of luck to you!
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Eliz. C. A. Johnson
Post Office Box 8
Danville, California 94526-0008
Legal disclaimer: I do not practice law in any state but California. As such, any responses to posted inquiries, such as the one above, are limited to a general understanding of law in California and not to any other jurisdiction. In addition, no response to any posted inquiry should be deemed to constitute legal advice, nor to constitute the existence of an attorney/client or other contractual or fiduciary relationship, inasmuch as legal advice can only be provided in circumstances in which the attorney is able to ask questions of the person seeking legal advice and to thus gather appropriate information.
The bottom line is that you need to file these returns. If your husband will not file you can file as married filing separately. To not file a tax return is criminal. Since the IRS is already sending you letters it won't me long before this issue can become more serious for you. The excuse that your husband will not let you file will not be a valid defense. You need to make a decision - your husband is not leading you down a good path. Let him know that there are a lot of options for dealing with unpaid taxes. However, the options are very limited for unfiled returns. The penalties are also greater - plus the potential for criminal charges. If you have a refund coming in any of these years you can only go back 3 years form the due date of the return.
Any individual seeking legal advice for their own situation should retain their own legal counsel as this response provides information that is general in nature and not specific to any person's unique situation. Circular 230 Disclaimer - Advice given in this response cannot be used to eliminate penalties with the IRS or any other governmental agency.