Didn't Pay Taxes in Washington, D.C.? A Look at Consequences and Options
Failure to file is a crime, but the IRS offers options before it seeks penaltiesBy Pam George | Reviewed by Canaan Suitt, J.D. | Last updated on October 19, 2023 Featuring practical insights from contributing attorneys Michael S. Fried, Scott D. Michel and David S. De Jong
Use these links to jump to different sections:
- The Seriousness of Missed Tax Filings
- The Good News: Solutions for Late Filers
- When Should I Consult with a Tax Lawyer?
Tax season is never enjoyable. But what happens if you fail to pay your taxes in the District of Columbia? It’s not good.
Michael S. Fried, of Fried & Rosefelt, has witnessed it many times. Driven by sleepless nights, clients come to him to resolve unpaid tax return problems. “The quality of their life deteriorates when they put off solving the problem,” says Fried. “It doesn’t go away.”
Not reporting income does more than affect your quality of life. “Any situation where someone has the intent to evade or cheat and acts in that direction is illegal,” says Scott D. Michel of Caplin & Drysdale. “If the IRS sees enough badges of fraud and evidence of intent, they can turn it into a criminal case. But even if they don’t, there could be significant—and in some cases catastrophic—financial consequences.”
Being proactive with tax payments can help avoid potential prosecution.
The Seriousness of Missed Tax Filings
“Although failure to file is a crime, the IRS will normally give you a couple of opportunities to pay once they’ve found you or you come forward on your own,” says David S. De Jong of Stein Sperling Bennett De Jong Driscoll.
It’s better to file the back-year federal tax returns than not to file—even if you can’t make a payment.
“Failure to file returns can itself be a criminal offense, and it’s better to get the returns in and deal with the collection side of the IRS,” Michel says.
He notes you may qualify for a payment program or extension beyond the filing deadline, but that you should hire a qualified tax preparer and fully disclose your financial situation. Being truthful to the tax preparer can guard against future accusations of wrongful conduct if the return is inaccurate.
If you don’t file, you may be tempted to skip the next year—and the next. “At some point, the IRS will most certainly catch up,” De Jong says.
The Good News: Solutions for Late Filers
Delinquent taxpayers who come forward should file complete and accurate tax form returns, Michel says. The IRS Fresh Start initiative has a variety of programs to help settle an IRS tax debt and avoid liens.
Other tools to help tackle debt, according to Fried:
- Offers of compromise;
- Installment programs;
- Bankruptcy (learn more about bankruptcy eligibility).
The IRS’s voluntary disclosure program may provide protection against criminal prosecution if the disclosure is timely, complete, and accurate and if the taxpayer cooperates with the IRS and pays or makes a good faith effort to pay.
“In a voluntary disclosure, while there can be civil penalties in some circumstances, the amounts of these penalties are often below—and in some cases, far below—what the law would allow the IRS to impose,” Michel says.
When Should I Consult with a Tax Lawyer?
You should seek out a tax professional if you owe a substantial amount of money, you’re being audited, or you’re contacted by the IRS’s criminal investigation division.
“Rush to consult with counsel,” DeJong says of this last one. “When they are involved, it is a serious matter.”
“My colleagues and I have seen every kind of tax fraud imaginable in 30-plus years of practice,” Michel says. “The U.S. has a remarkable system of voluntary compliance, but some people still are motivated to cheat. Aside from being unquestionably illegal, cheating is not worth the hassle, the cost in some cases, or even going to jail. Pay the tax and move on.”
To enrich your understanding of this legal area further, including federal income tax, taxable income, due dates, and tax refunds, explore our tax overview and related content.
Find top lawyers with confidence
The Super Lawyers patented selection process is peer influenced and research driven, selecting the top 5% of attorneys to the Super Lawyers lists each year. We know lawyers and make it easy to connect with them.Find a lawyer near you