Taxpayer Revolt? Why More People Are Avoiding Filing Taxes This Year

It may be tempting to skip filing due to the overwhelmed IRS, but doing so could have financial and legal consequences.

As tax season unfolds, an increasing number of Americans are choosing not to file their tax returns, citing frustration with the Internal Revenue Service (IRS), financial hardship, and the perception that enforcement is lax due to an overwhelmed system. While skipping tax filing might seem like an appealing option in the short term, taxpayers should be aware of the potential financial and legal consequences.

A Growing Trend of Non-Filers

Reports indicate that an increasing number of individuals and businesses are delaying or altogether avoiding filing their taxes this year. Several factors contribute to this trend, including lingering distrust in the government’s handling of tax policies, a rise in gig and freelance work complicating self-reported income, and the misconception that the IRS lacks the resources to pursue non-filers aggressively.

Additionally, with recent IRS staffing shortages and backlog issues, some taxpayers believe that failing to file might go unnoticed. However, while the IRS may be slower to process refunds and respond to inquiries, it still maintains sophisticated systems to track unfiled tax returns and unpaid liabilities.

Potential Consequences of Skipping Filing

Avoiding tax filing can have severe consequences, including:

1. Failure-to-File Penalties – The IRS imposes steep penalties for not filing taxes on time. The failure-to-file penalty is typically 5% of the unpaid taxes for each month a return is late, up to a maximum of 25%.

2. Loss of Refunds and Credits – Taxpayers who are owed a refund but do not file within three years forfeit their right to claim it. Many lower-income earners who qualify for the Earned Income Tax Credit (EITC) or Child Tax Credit could be missing out on substantial refunds.

3. Accrued Interest and Additional Penalties – If taxes are owed, interest starts accruing from the original filing deadline. Over time, this can significantly increase a taxpayer’s debt.

4. Legal Repercussions – While the IRS does not immediately prosecute all non-filers, persistent tax evasion can result in legal action, including fines and, in extreme cases, imprisonment.

5. Credit and Financial Setbacks – Unpaid tax debt can lead to tax liens, negatively impacting credit scores and financial opportunities, such as securing a mortgage or business loan.

IRS Efforts to Encourage Compliance

Despite delays and challenges, the IRS is taking measures to ensure tax compliance. In recent years, the agency has increased efforts to modernize its systems and enhance enforcement. Taxpayers who fail to file may receive notices, audits, or even wage garnishments in extreme cases.

The IRS has also introduced expanded options for payment plans and penalty relief for those facing financial hardship, providing a means to comply without undue burden.

What Should Taxpayers Do?

For those hesitant to file due to concerns about affordability or complexity, there are options available:

• Seek Professional Help – A tax professional or certified public accountant (CPA) can help navigate complicated filings and identify credits or deductions that may reduce tax liability.

• Use Free IRS Resources – The IRS provides free filing options for eligible individuals through programs like Free File and Volunteer Income Tax Assistance (VITA).

• File for an Extension – Taxpayers who need more time to prepare their return can request an extension, though this does not delay payment of any owed taxes.

• Set Up a Payment Plan – If taxes are owed but unaffordable, the IRS offers installment agreements that allow for manageable payments over time.

Conclusion

While the temptation to avoid filing taxes may be stronger than ever, taxpayers should be aware of the long-term risks. Rather than skipping their tax obligations, individuals and businesses should explore available options to file properly and avoid unnecessary penalties. With proper planning and assistance, taxpayers can navigate their obligations without facing severe financial and legal repercussions.