I have not filed in years. What happens now?

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If you do not file, the IRS states it can file a return for you — a substitute for return — and assess tax on it. It notifies you of tax due first, and assesses if you do not respond or if the amount is upheld in Tax Court.

That assessment starts the collection clock. The IRS states that when it assesses the tax, "the 10-year collection period starts".

Filing your own returns afterwards is still worth doing, for two reasons the IRS states. The tax may come down: where your return shows less than the substitute for return, it says it may reduce or reverse the tax due. And filing is a precondition for most of what comes next — on LT16 and LT75 the IRS states "you must be current on your filings in order to apply for an installment agreement."

What filing does not do is reset the clock. The IRS states the CSED stays the same where your return reduces the tax, and that where your return shows MORE, it assesses the increase, the original CSED is unchanged, and a NEW CSED is set for the additional tax. One tax year can end up carrying two collection deadlines.

One deadline here costs money rather than triggering a penalty, and it is easy to miss. The IRS states on LT26 that to receive a refund on a late return you must file it "within three years from the original return due date, or within two years from the date you full paid the tax, whichever is later." Past that the return can still be required and the refund is gone.

The notices in this area move fast. LT18 and LT26 both ask for the completed return within 10 days — LT18 "from the date on the letter", LT26 "from the date of your notice".

I have not filed in years. What happens now?

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