January 4, 2026 | Unfiled Tax returns
If you haven’t filed your taxes, you may think you can fly under the radar and not be detected by the IRS. Unfortunately, the IRS probably has information about you already, so the agency will quickly realize that you skipped your filing obligation. For instance, the IRS may have income information from your employer on a W-2 tax form, information about investment income on a 1099-B, or information about other income on a 1099-MISC, 1099-NEC, etc.
The best step you can take now is to file your unfiled taxes. However, if your circumstances limit your ability to do so, you have options. This guide walks through how the IRS knows about your tax obligations and what your next move should be when you need to file but haven’t.
Key Takeaways:
- If you have unfiled returns, the IRS usually already has your information and will notice if you fail to file on time.
- Ignoring IRS notices can lead to escalating penalties, interest, and potential collection actions, such as levies.
- You risk losing your tax refund if you wait more than three years to file.
- The IRS may file a substitute for return (SFR) for you, but it won’t account for any tax breaks you qualify for.
- File right away or consult a tax professional to get back in good standing and get your tax returns filed.
IRS Notices for Non-Filers
If you don’t file your tax returns but were required to, the IRS will start sending you notices. Here’s a brief look at the notices you may receive and why:
- CP59: This notice alerts you that you didn’t file a Form 1040 tax return (a personal income tax return) based on the IRS’s information.
- CP259: This notice is for businesses that didn’t file a Form 941tax return.
- Form 15103: The IRS will likely send you this form with one of the other notices, which is the Form 1040 Return Delinquency. You will use this form to respond with the relevant information about your taxes.
- CP63: If you haven’t filed a tax return and are owed a refund, the IRS may send you Notice CP63 that indicates the agency is holding your refund because of outstanding returns that may lead to additional taxes owed.
- CP515/CP516: These notices serve as reminders from the IRS that you still haven’t filed your Form 1040 but should have.
Many taxpayers think they can ignore these notices, and the problem will go away. But it’s important to act quickly once you receive any mail from the IRS. Ignoring notices will lead to more penalties and interest. Contact us as soon as you receive an IRS notice.
Understanding the Statute of Limitations for Unfiled Returns
If you fail to file your return, there are some key dates to be aware of for when the IRS can assess tax and for getting your refund.
Statute of Limitations for Unfiled Returns
First, there is no statute of limitations on assessing tax if you never filed a return. This means the IRS can come after you for those back taxes indefinitely.
Collections Statute of Limitations
Once you file, the IRS has 10 years from the date you file (or the due date if you file early) to collect unpaid taxes related to the return. After that time has passed, they can no longer collect.
Time Frame for Claiming a Refund
If you’re owed a refund but haven’t filed, you only have three years from the original tax return due date to claim that refund. So, you should file as soon as possible if you want to get that money from the IRS.
What Is a Substitute for Return?
Aside from potentially missing out on your refund, the other risk is a Substitute for Return (SFR). The IRS sometimes files an SFR for you if you were supposed to file a return but didn’t.
The agency will use the information they have to come up with an assessment, such as tax forms from employers or clients who paid you.
The problem with an SFR is that it doesn’t account for any credits or deductions, even if you qualify for them. So, the SFR tax assessment will almost always be more than you would actually owe if you filed yourself. This can be especially devastating if you have self-employment income, and the IRS generates a return based on your 1099 income but with no business deductions.
Once the IRS generates the SFR, they’ll send you a Notice of Deficiency. That gives you 90 days to respond (150 if you’re out of the country). If you don’t appeal or file a correct return, the agency will then start collecting the balance due shown on the SFR.
Instead of waiting for the IRS to file an SFR, file your outstanding tax returns as soon as you can to take advantage of tax breaks. Talk to Timothy Hart, a CPA and attorney, if you have questions about filing an overdue return.
Other Risks of Waiting to File
Aside from SFRs and missing out on your refund, there are a few other risks to be aware of when you’re dealing with unfiled tax returns:
IRS Penalties
The IRS charges penalties for unfiled returns and late payments. The failure-to-file penalty equals 5% of the taxes you owe on the return per month, up to 25%. This gets back-dated to the original filing deadline – so if you file five or six months late, this penalty will be maxed out.
You’ll also incur a failure-to-pay penalty. This ranges from .25 to 1% per month. It also caps out at 25% and can stack on top of the failure to file penalty. If you don’t owe, you won’t incur these penalties.
Building Interest
On top of penalties, the IRS charges interest that continues to build until you pay off what you owe. The interest applies on top of the tax debt and on top of the penalties. It also compounds daily. This means your balance will continue to grow substantially if you ignore your tax balance and subsequent penalties for failing to file.
IRS Collection Actions (Liens, Levies, Garnishments)
The IRS will start trying to collect what you owe if you miss filing and payment deadlines. After sending out notices and charging you penalties, the agency may then pursue more serious actions, such as filing a federal tax lien against you, levying (seizing) your assets, or garnishing your wages.
What to Do Next When You Have Unfiled Taxes
If you’re trying to figure out what to do when you have unfiled tax returns, the most important thing to remember is that you should act quickly and never ignore IRS notices. Here are the next steps to take:
File Your Outstanding Returns
As soon as you can, file your tax returns. This can help you minimize the failure-to-file penalty, and it allows you to set up payments. Generally, you can’t set up payments or apply for settlements for any tax year unless you’ve filed the previous five years.
Ask for an Extension
If you can’t file your return on time, consider asking the IRS for an extension, which will give you an extra six months to file. Just remember that you still must pay the taxes you owe by the April due date, even if you request an extension. If you pay late, you’ll incur the failure to pay penalty, but at least you won’t incur the failure to file penalty.
Explore Tax Resolution Options
You may not have filed your tax returns because you’re worried you can’t afford your tax bill. If this is the case, you can still file your returns and then apply for a resolution option:
- Payment plan – allows you to pay off the balance in monthly installments.
- Offer in compromise – lump sum settlement based on income and assets for taxpayers who can’t afford their tax bill, even with a payment plan.
- Currently not collectible (CNC) status – when the IRS puts a pause on collections for your account because of financial hardship.
There’s also a partial payment installment agreement, which is ideal for people who can’t make the minimum payment on a traditional payment plan but don’t qualify for CNC status. You make payments based on your budget, and the IRS writes off any remaining balance when the collection period expires.
Consult a Tax Professional
If you’re still not sure what to do, or you have a complex tax situation, talk to a tax expert, like a CPA or tax attorney at IRS Tax Pros. A professional will review your case, explain your options, and help you negotiate with the IRS to get back in good standing.
Act Now by Contacting the Timothy S. Hart Law Group
If you’ve missed a tax return or two, or even if you haven’t filed in many years, remember that the IRS likely has information about your unfiled returns. The agency could decide to file an SFR on your behalf and charge you with penalties and interest. Sometimes, this process starts a few months after you miss the deadline, but in other cases, it may take years for the IRS to reach out to you.
Filing as soon as possible is the best way to avoid a growing tax balance and more severe consequences, like levies. But to ensure you take the right steps, you should work with a tax professional.
Our CPA and tax attorney, Timothy S. Hart, can help if you have unfiled tax returns. We’ll review your situation and help you take control of your outstanding taxes. Don’t wait – schedule your free consultation with us today.
FAQs About Unfiled Taxes
Why Did I Receive Notice CP59?
The IRS will send Notice CP59 when you have unfiled individual income tax returns. This means you didn’t file Form 1040 on time, which is usually due on April 15 for the previous year. The IRS may charge you with the failure to file penalty, interest, and the failure to pay penalty if you don’t pay what you owe on time.
What Happens If I Ignore an IRS Notice About Unfiled Returns?
Ignoring IRS notices will only lead to more trouble. You’ll eventually have to deal with the issue, and more penalties and interest will accrue on your account. If you owe money, you could also have to face more severe collection actions from the IRS, like wage garnishment, levies, and federal tax liens.
How Long Can the IRS Pursue Unfiled Tax Returns?
If you don’t file your return, there is no statute of limitations for the IRS on pursuing collections on those taxes. That means they can go back indefinitely to try to collect if you don’t file.
If I File Late, Can I Still Get a Refund?
Yes, if you file within three years from the original return due date, you can claim your refund. After that date has passed, you won’t be able to get those funds from the IRS.
Can the IRS File a Tax Return For Me?
If you don’t file and the IRS has information about you from other sources, like an employer, the agency may file a substitute for return on your behalf. While you may think this is a good thing and that it takes the work off your plate, remember that an SFR won’t include any credits or deductions you’re eligible for, so the tax assessment will likely be higher than if you filed your return yourself.
Sources:
https://www.irs.gov/pub/notices/cp259_english.pdf
https://www.irs.gov/pub/notices/cp59_english.pdf
https://www.irs.gov/individuals/understanding-your-cp259-notice
https://www.irs.gov/individuals/understanding-your-cp59-notice
https://www.irs.gov/pub/irs-pdf/f15103.pdf
https://www.irs.gov/individuals/understanding-your-cp63-notice
https://www.irs.gov/payments/failure-to-file-penalty
Attorney Timothy Hart
Timothy S Hart, the founding partner of the tax law firm of Timothy S. Hart Law Group, P.C. is both a New York Tax Lawyer & Certified Public Accountant. His area of expertise includes innovative solutions to solve your Internal Revenue Service and New York State tax problems, including tax settlements through the Federal and New York State offer in compromise programs, filing unfiled tax returns, voluntary disclosures, tax audits, and criminal investigations. [ Attorney Bio ]