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Taxpayers who voluntarily fail to file tax returns or fail to respond to IRS notices face a
number of penalties. In some instances, the IRS will file a return for the taxpayer. This IRS-generated return rarely works in favor of the taxpayer. Often, the IRS will not include deductions or other factors that would otherwise allow the taxpayer to reduce her tax burden. The IRS will also initiate action to collect any money owed, such as placing liens on bank accounts and other property owned by the delinquent taxpayer.
The IRS first provides notice of failure to file tax returns with the Proposed Individual Tax Assessment, also known as a 30-day letter. This notice provides the taxpayer with 30 days to submit either a completed federal tax return accompanied by a cover letter, a completed Consent to Assessment and Collection form, or a letter stating why a tax return is not required. If there is no response to the 30-day letter, the IRS sends the taxpayer a Notice of Deficiency, also known as a 90-day letter. The 90-day letter imposes an additional 90-day deadline upon the taxpayer to submit one of the documents requested by the 30-day letter.
