Tax Debt Help - What's Up With Those Penalties?

“Is there a penalty for not filing even if you have a refund coming?”

If you haven't filed a return with the IRS within three years – you will lose your refund.

And that is your penalty and it can be very costly depending on how much refund you were to get.

Normally, penalties are based on the balance due. When there isn’t one, 0×25% is still 0.

However, when you don’t file, IRS may not know that you have a refund coming. If they prepare a substitute tax return for you it will be based on single, no dependents and no deductions.

This can be especially rough if you sold stocks at a loss. IRS doesn’t know how much you paid for the stock. They only get the report that you sold the securities. You could get hit with a bill for thousands of dollars.

So, not filing when you have a refund due may not generate any immediate penalties – you’re the only one getting hurt.

Remember, there are no tax deductions for donations to IRS.