If you have unfiled tax returns, you undoubtedly have your reasons, whether they are related to problems in your personal life, your business or both. Once a person has decided not to file a return with the Internal Revenue Service for a year, it can be much more difficult the following year to return to compliance.
Worries about penalties and possible criminal sanctions rise as the years go by and your income tax returns go unfiled. It can be useful in that situation to remember that the IRS strategy is to encourage nonfilers to voluntarily return to compliance. When the agency is deciding on possible criminal prosecution, it factors in whether or not you voluntarily disclosed your noncompliance.
In most cases in which a person voluntarily comes forward and discloses that they have failed to file tax returns, and then arranges to pay back taxes, penalties and interest, the IRS will not file criminal charges.
There are exceptions, of course, including for people whose income was from illegal activities.
Another exception can be when a person has repeatedly failed to file even though the IRS repeatedly contacted them about the failures.
It's good to remember that the IRS is often willing to negotiate with you and your tax attorney, sometimes willing to settle for less than the full amount of back taxes owed. This is one of many topics you can discuss with a tax law firm experienced in helping clients return to compliance.