The IRS can fill out a substitute return for you—and it usually isn’t accurate. And a lot of penalties and interest will accrue.
Even if you don’t go to jail, blowing off the Internal Revenue Service is a really bad idea.
Take Larry Cecil Cabelka of Megargel, Texas. Mr. Cabelka didn’t submit tax returns for 12 years during the 1990s and 2000s, according to a March 26 ruling by a U.S. appeals court. As a result, said the court, he owes the U.S. more than $26 million.
Mr. Cabelka, who has worked as a farmer, harvester and farm-equipment dealer, says he doesn’t believe he should owe the $26 million because income and bank accounts attributed to him weren’t his, and that he thought his then-wife was filing some of his returns. He also calls a government attorney in his case “crooked and deceitful.”
“I don’t have the assets to pay millions of dollars of taxes,” he says.
But Bryan Skarlatos, a criminal tax lawyer in New York, advises people who can’t pay their tax bills to borrow from another source if possible.
“IRS debts often grow faster than other debts because of daily compounding of interest on the tax and penalties,” he says. He adds that the IRS has super-creditor status, so it can seize money from a filer’s bank account or wages.