Taxpayers often call us in a panic because they have received a threatening letter from the IRS and they are one step away from a wage garnishment or a bank levy. Our clients come from a variety of experiences and backgrounds, but they all have one thing in common: they owe the IRS and can’t pay what they owe. And many, if not most of our clients, also have missing tax returns.
What are the typical repercussions for failing to file a tax return? The IRS will send notices asking the taxpayer to file, maybe assign a Revenue Officer to secure the return, possibly file a Substitute for Return, assess a failure to file penalty, etc. As for criminal prosecution, I’d say it is pretty uncommon. In fact, failing to file on its own is not criminal; there must be some additional affirmative act to elevate the misconduct to a felony.
I was surprised to hear about Lauryn Hill’s tax troubles today. She has been charged with failing to file her 2005, 2006, and 2007 tax returns. None of the reports say what the “extra something” was in Hill’s case. My best guess for now is that she simply fits the profile of people they like to prosecute as a public spectacle (i.e., a downward trending musician with an extra large tax bill) and the IRS isn’t about to let her get away with it.