What are potential penalties for failing to file a tax return?

The potential penalties for failing to file a tax return are primarily based on the percentage of unpaid taxes owed for each month the return is late. This penalty serves as a way to encourage timely filing and compliance with tax obligations. Specifically, the IRS imposes a failure-to-file penalty, which is calculated as a percentage of the outstanding tax debt. This penalty typically starts at 5% of the unpaid tax amount for each month (or part of a month) the return is overdue, and it can increase the longer the return remains unfiled.

This method of assessment reflects the IRS's focus on ensuring that taxpayers meet their filing responsibilities and pay any taxes owed, rather than imposing a fixed fee, which may not appropriately account for the size of the tax debt being reported. Furthermore, criminal charges are generally not the first recourse for failing to file a tax return; these are reserved for more severe failures to comply with tax laws, particularly in instances of willful tax evasion or fraud. Lastly, stating that no penalties apply is incorrect, as the IRS has established clear penalties for late filings to promote accountability among taxpayers.