Whatever your reason, you may not know that the IRS views not filing a tax return as a more serious offense than filing your return but not paying your taxes. Not only is IRS likely to find out about your unfiled return (remember, the IRS already has your income information from a W-2 or W-9, if you fail to send in a tax return, chances are great that their computers will flag the discrepancy, and you will be contacted.) but you may face stiffer penalties than if you simply failed to pay.

In fact, not filing a tax return is a criminal misdemeanor, which carries a penalty of up to $25,000 and/or one year in jail for each year you failed to file your return. Even if you aren't criminally prosecuted, you may also face civil penalties of up to 25 percent of the amount due on your return.

If you are unable or unwilling to file your tax returns after the IRS sent you several notices, they may eventually file a tax return for you. Your IRS-completed return, called a substitute for return (SFR), will almost always result in a higher tax debt than if you filed the return yourself. That's because when the IRS files an SFR, it will only grant you the standard deduction for a single taxpayer with no dependants, even if you normally file jointly, claim four dependants and itemize your deductions.

The good news is some of these fines and fees may be mitigated simply by mailing in your late return. For example, the IRS has an unwritten rule that it will not criminally prosecute you if you mail in a late return before they contact you. (Civil late filing fees may still apply.) Additionally, if the IRS already completed an SFR for you, you may be able to reduce the amount of taxes owed simply by filing your old return and taking advantage of every deduction you are entitled to.

Remember, since your fine is based on the amount of taxes you owe, it is extremely important to aggressively take every deduction legally available to you. Also keep in mind that when filing a late tax return, you must use the 1040 from that year, and go by the tax code that was in place for that year. For example, if you are filing a late return for 2007, you must complete a 2007 tax return and calculate your taxes based on the 2007 tax code.

As with many tax matters, you may want to consult a tax professional to assist you with filing a late tax return. A qualified tax professional should have several years of experience dealing directly with the IRS, and has likely helped many other taxpayers just like you file late tax returns.