Failure to File

This is a new one, but I could not find a clear answer on www.irs.gov (http://www.irs.gov).

I will cut to the chase; my stepson did not file federal taxes last year nor did he file for an extension. He would have had a sizeable refund. I was hesitant to even ask here, because, in short, if he even gets a portion of this money back, he will just blow every dime within the month.

Anyway, I was more concerned about any legal implications. I assumed because it would be a refund, the worst-case scenario would be no refund. I wanted to make sure there was nothing else (additional fines, etc.).

Happy New Year and thanks in advance for your answers!

Dingo

Typically, the penalty is MONDO fines and fees and interest -- on money owed, of course. I can't see, actually, what benefit there would be in punishing someone whose money you got to keep for free.

He should file for last year, and get his refund -- like you say, at most, they will likely tack on fees which will eat away at the refund. And if he goes to jail (which I think unlikely), so what? -- it's his own grave he dug, and waiting another year, or five years, or ten years, won't improve his situation. Sometimes, you have to let people be stupid, and pay for their stupidity.

Dingobisquit,

Have your stepson file last year's tax return.

Offer to complete the return for him for 10% of the refund amount.
I don't like seeing him get off scott free.

He will get the refund and don't be surprised if there is interest added to his refund. That interest will be taxable income in the year he receives it.

Usually the penalties and fees are waived when there is a refund.

Another good thing here is that he will be ready to do his 2007 return.

Thanks for your reply, Clyde. My wife would kill me if I tried to charge him 10%, so I guess he can go to Jackson Hewitt or H&R Block as a penalty...

...or do it himself! :D

Dingobiscuit,

Bummer,

The 2006 return will need to be a paper return, and is likely to take awhile.
The 2007 return could be filed electronically.
I would file the 2006 paper return first and then a week or 2 later file the 2007, electronically if that is best.

If you were to prepare the 2006 return, it may help build a relationship between you and your stepson. That could be worth more than the 10% I proposed above.

I already retrieved the 2006 1040 and tax schedule from the IRS website. As far as how long it takes for him to receive (and inevitably blow) his refund, I figure if he has already waited eight months, what's another 6-8 weeks?

Thanks again!