Haven’t Filed Taxes in 5 Years? Consequences & Options
Marc Boulanger • March 4, 2025
If you haven’t filed taxes in five years, you may be wondering what happens next. Whether it’s due to financial hardship, personal circumstances, or simply procrastination, not filing your tax returns for five years can lead to serious IRS consequences. The good news is that there are steps you can take to get back into compliance and reduce penalties.
In this guide, we’ll cover:
- What to expect if you haven’t filed taxes in five years
- IRS notices and enforcement actions
- What happens if you haven’t filed business taxes
- How the IRS files a Substitute for Return (SFR)
- Filing your back taxes even if you’re missing documents
- Why you should file as soon as possible—even if you can’t pay
- How to get professional help to resolve your tax issues
What to Expect If You Haven’t Filed Taxes in Five Years
The longer you go without filing, the more serious the IRS consequences
become. Here’s what you should expect:
1. Accruing Penalties & Interest
If you owe taxes, penalties and interest continue to accumulate for each year you haven't filed. These include:
- Failure-to-file penalty: 5% per month (up to 25% of the total tax due)
- Failure-to-pay penalty: 0.5% per month (up to 25%)
- Interest on unpaid taxes: Accrues daily based on current IRS interest rates
2. IRS Collection Efforts Escalate
The IRS has a 10-year statute of limitations to collect unpaid taxes. The longer you go without filing, the more aggressive their collection efforts can become. This may include:
- Tax liens: The IRS places a legal claim against your property
- Wage garnishments: The IRS takes a portion of your paycheck
- Bank levies: The IRS seizes money directly from your bank accounts
- Seizure of assets: The IRS can take personal or business assets to satisfy the debt
3. Loss of Refunds
If you were due a refund in any of the last five years, you have only three years to claim it. After that, the IRS keeps the money. Since you haven’t filed for five years, any refunds for the first two years are gone forever.
4. IRS May File a Substitute for Return (SFR)
If you haven’t filed, the IRS can file a return on your behalf using their own estimated numbers. An SFR usually results in a higher tax bill because:
- The IRS only includes known income (W-2s, 1099s, etc.)
- No deductions, credits, or business expenses are included
- The result is an inflated tax debt that is harder to reduce
IRS Notices for Unfiled Tax Returns
If you’ve ignored your tax filings for five years, you may have already received several IRS notices, including:
- CP59 Notice: First notice informing you of unfiled returns
- CP2566 Notice: IRS intent to file a Substitute for Return
- CP504 Notice: Final warning before levy action
- Notice of Federal Tax Lien: Public record showing you owe taxes
- Intent to Levy Notice (LT11 or CP90): Final notice before the IRS seizes assets
If you’ve received any of these, it’s crucial to act before the IRS takes enforcement action.
What If You Haven’t Filed Business Taxes in Five Years?
For business owners, failing to file tax returns for five years is even more problematic. Consequences include:
- Higher tax liability: The IRS assumes maximum profit with no deductions
- Loss of deductions & credits: Business expenses and write-offs are forfeited
- Payroll tax penalties: If you had employees and failed to file payroll taxes, penalties can be severe
- Potential criminal charges: If the IRS believes there is willful tax evasion, legal consequences may follow
To resolve business tax issues, you should file as soon as possible and work with a tax professional to mitigate penalties.
How to File If You’re Missing Documents
If you haven’t filed in five years, you might not have all the necessary records. Here’s how to proceed:
1. Request IRS Transcripts
The IRS keeps records of income reported by employers, banks, and other entities. You can obtain transcripts of W-2s, 1099s, and other income forms through your IRS online account.
2. Contact Employers & Financial Institutions
If you’re missing documents, reach out to past employers, banks, and brokerage firms for copies.
3. Use Bank Statements & Accounting Records
Self-employed individuals and business owners can reconstruct income and expenses using bank statements and bookkeeping records.
4. File an Estimate If Necessary
If records are unavailable, file a reasonable estimate based on past earnings and expenses. The IRS allows amendments later if needed.
Why You Should File Taxes ASAP
(Even If You Can’t Pay)
Even if you can’t afford to pay, filing is the best course of action. Here’s why:
1. Stops Failure-to-File Penalties
The failure-to-file penalty (5% per month) is much larger than the failure-to-pay penalty (0.5% per month). Filing stops this penalty from growing.
2. Qualify for a Payment Plan
The IRS offers several options:
- Installment Agreements: Pay over time
- Offer in Compromise (OIC): Settle for less than owed
- Currently Not Collectible (CNC): Temporary relief if you can’t afford payments
3. Prevents IRS Enforcement Actions
Filing now can help avoid liens, levies, and garnishments before they escalate.
4. Keeps You in Good Standing for Loans & Passports
Not filing taxes can affect mortgage applications and may lead to passport revocation under the FAST Act.
5. Preserves Your Social Security & Retirement Benefits
If you are self-employed, not filing can reduce your future Social Security benefits, since income isn’t reported.
Take Action Now—Call Our Orange County Office for Expert Help
If you haven’t filed taxes in five years, don’t wait for the IRS to take action against you. At Boulanger CPA and Consulting, we specialize in helping individuals and businesses in Orange County resolve back taxes, minimize penalties, and get back into compliance with the IRS. Our Orange County CPA
for back taxes can help.
📞 Call our Orange County office today at 657-218-5700
for a confidential consultation. Our experienced team has helped countless Orange County residents and business owners navigate IRS issues and regain financial stability.
🌟 If you are wondering "what the best tax relief services near me" are, we are located in the heart of Orange County, we understand local tax challenges and can provide the best solutions tailored to your needs. Take control of your tax situation today—call us now
and let us help you get back on track!
Will I go to jail if I haven’t filed my taxes for five years?
While failing to file taxes is serious, jail time is rare for most taxpayers. The IRS is more focused on collecting unpaid taxes than criminal prosecution. However, if you willfully evade taxes or commit fraud, criminal charges are possible. Filing as soon as possible can help avoid legal consequences.
Can I still get a refund if I file late?
The IRS allows refunds to be claimed up to three years from the original due date of the return. Since you haven’t filed in five years, you’ve likely lost refunds for at least two years. However, filing now can prevent further loss of refunds.
What if I don’t have the money to pay back taxes?
Even if you can’t pay the full amount, you should still file. The IRS offers payment plans, hardship status, and settlement options like Offer in Compromise (OIC), which may allow you to pay less than what you owe.
How do I know if the IRS has filed a Substitute for Return (SFR) for me?
You can check by requesting an IRS transcript or reviewing any notices the IRS has sent, particularly a CP2566 Notice or an SFR assessment letter. If the IRS has filed an SFR, it’s usually in your best interest to file a proper return to claim deductions and credits.
Can I file my back taxes myself, or do I need a CPA?
While it’s possible to file on your own, working with a qualified CPA or tax professional can help you avoid costly mistakes, negotiate with the IRS, and ensure you claim all eligible deductions.
What happens if I ignore my unfiled taxes?
The IRS can take aggressive action, including tax liens, wage garnishments, and bank levies. Ignoring the problem won’t make it go away—taking action now can help prevent enforcement.
Does California have its own penalties for not filing state taxes?
Yes. If you live in Orange County or anywhere in California, the Franchise Tax Board (FTB) can impose additional penalties and collection actions, similar to the IRS. Filing with both federal and state agencies is crucial.
How soon should I act?
Immediately! The longer you wait, the more penalties and interest accrue. Plus, the IRS may escalate collection efforts. Contact our Orange County office today to start resolving your tax issues before it’s too late.
Frequently Asked Questions
Marc The CPA's Tax Blog
Can’t afford IRS back taxes? You may qualify for hardship (CNC) status — a pause on levies and garnishments. Learn eligibility and next steps with an Orange County CPA.
Owe back taxes to the California FTB? Learn how settlement works, who qualifies for an FTB Offer in Compromise, and how to reduce or resolve your state tax debt — with help from a CPA.
The IRS can levy certain federal payments—but what about unemployment benefits? Learn how these levies work, what’s protected, and how to stop IRS collections.
If the IRS levied one of your subcontractors, you may be ordered to send their payments to the IRS. Learn how to comply—and protect your job site and liability.
Wondering if you qualify to settle your IRS debt? Learn how settlement amounts are calculated — and what factors matter most — from a CPA who helps Orange County taxpayers get real results.
Need a payment plan for FTB, CDTFA, or EDD debt? We help Orange County taxpayers negotiate state tax installment agreements that protect income and resolve tax problems — fast.
ements and why hiring a CPA in Orange County is essential for tax resolution.
Owe back taxes to the IRS? We help Orange County taxpayers negotiate affordable IRS Installment Agreements — including partial pay plans and levy protection.
Falling behind on payroll taxes? Learn how the IRS, EDD, and CDTFA enforce unpaid payroll tax debt — and how we help Orange County businesses protect themselves and get back on track.
penalties, protect yourself from personal liability, and resolve tax issues fast.
The IRS seized your business tools, vehicles, or assets? Learn when the IRS can levy business equipment and what to do if your operations are now at risk.
If the IRS levied your IOLTA or client trust account, you must respond fast. Learn how to protect client funds and what fiduciaries need to know about IRS enforcement.