If you file your tax return or pay your taxes late, you can suffer a variety of consequences. This is true whether you have a refund coming or owe taxes. Consequences include:
Delay in receiving your refund
You won’t get your refund until you file your tax return.
Penalties and interest
The IRS may assess interest and penalties on your account.
The IRS may file a tax return on your behalf
This is called a Substitute for Return (SFR). Because the IRS may not have complete information about your situation, it may overstate your tax liability. This could mean you’d owe more taxes, or you will receive less of a refund than if you had filed your own return. If the IRS files an SFR, it’s still in your best interest to file your own tax return to take advantage of any exemptions, credits, and deductions you’re entitled to receive.
When you file a tax return or the IRS files an SFR for you that shows a balance due, the IRS will try to collect that amount. Depending on your situation, the IRS may file a lien that attaches to your property or rights to property or place a levy on your bank account, wages, or other sources of income.
Another possible consequence of not filing your own tax return is someone else might use your Social Security number and file a false tax return, stealing your identity. If this happens, when you do file, your return and any refund will be delayed while the IRS determines which return is correct.
Losing your refund
You must file your tax return within a specified period to receive a refund. In general, you can lose your refund if you don’t file within the statute of limitation.
The Refund Statute Expiration Date (RSED) is the end of the time period in which a taxpayer can make a claim with IRS for a credit or refund for a specific tax year(s). If a claim is not made within the specified time, then a taxpayer may no longer be entitled to a credit or refund.
Submitting a Claim for Refund
If you want to make a claim for refund with the IRS, we require that you provide a detailed set of facts showing the overpayment regarding which you’re seeking a refund or credit, and include a written statement showing the claim is made under penalties of perjury. Generally, submitting a Form 843, Claim for Refund and Request for Abatement, will satisfy this requirement. The Instructions for Form 843 will provide you with the purpose of the form, explain when you can use the Form 843 to make a claim, when the form is not appropriate, and when another form is needed to make your claim.
Generally, you must file a claim for a credit or refund within three years from the date you filed your original tax return or two years from the date you paid the tax, whichever is later. If you file a claim after the three-year period, but within two years from the time you paid the tax, the credit or refund cannot be more than the tax you paid within the two years immediately before you filed the claim. See Pub. 556, Examination of Returns, Appeal Rights, and Claims for Refund, for more information.
The time period for filing a claim for refund may be different if your claim was filed regarding an exception, like a bad debt or worthless security. Periods of financial disability may suspend the time limitation for making a refund claim too. For more information on exceptions and periods of financial disability, see Pub. 556, Examination of Returns, Appeal Rights, and Claims for Refund.
If you do not file a claim within the set time prescribed by the IRS, you may no longer be entitled to the credit or refund.
If your claim for refund is disallowed, you will receive a certified letter explaining why your claim was disallowed and your right to appeal. You may also file a Refund Suit with the United States District Court or with the United States Court of Federal Claims within the statutory (by law) two-year period after receiving the letter of disallowance. Additional information on appealing or filing a refund suit would be found in your certified letter of disallowance.”