This past tax season, 11.6 million taxpayers filed an extension, giving them six more months to file their returns.įrom the IRS’ perspective, it only makes sense that taxpayers who file an extension would also follow up and file a tax return. The IRS is especially interested in pursuing people who file an extension but don’t file their returns. In all, the IRS believes that more than 7 million taxpayers don’t file a required tax return every year. The IRS also uses taxpayers’ filing history to question whether they should file a return. These statements report taxpayers’ income, and the IRS uses them to identify people who haven’t filed their returns. A major way is through third-party information statements, such as Form W. The IRS has systems to identify taxpayers who haven’t filed a required tax return. If the IRS proves that taxpayers didn’t file because they had fraudulent intentions, the penalty can be as high as 75 percent of the tax they owe.
The penalty for not filing is bad: If taxpayers file five months or more after the due date, the penalty is 25 percent of the tax they owe. One of the biggest mistakes taxpayers can make is to not file a required tax return.
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