Can the IRS Hold Your Tax Refund if You Didn't File in Previous Years?

Filing your taxes is important to preserve future returns and minimize penalties.

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Every April, taxpayers rush to the post office to put their tax returns in the mail – earlier if they’re eager to get their refunds. However, some taxpayers ask for a delay or fail to file altogether because they aren’t required to, are at a certain age or didn’t earn enough income during the tax year. But when the time comes that they do, once again, file, they may worry that the lack of a tax return in the preceding years will get in the way of being issued a refund. Fortunately, this likely won’t be the case.


If your refund is on hold due to a past failure to file, you will receive a CP88 Notice alerting you of the issue and giving you the opportunity to respond.

Preventing a Tax Refund Delay

If you fail to file a return, the IRS will assess whether you likely owe taxes or not. Even if you don’t file, keep in mind that anyone who paid you during the year may report those wages to the IRS, which will allow the agency to reasonably determine how much you likely owe. Failure to file when you owe taxes can result in penalties of 5 percent of your actual unpaid taxes for every month your return is late, up to a maximum of 25 percent. After 60 days, you’ll owe those penalties, plus $135 or the full amount of your taxes due.

If you haven’t already received notice of your delinquent return, you’ll find out the next time you file and await a refund. At this point, the IRS will issue a CP88 Notice, alerting you that your refund has been held because you have failed to file at least one tax return and it is believed you owe taxes. At that point, you’ll have the option of filing your tax return immediately or issuing a response. The response can explain why you’re filing late, why you don’t have to file or that you have already filed. Although there is no official IRS refund hold release, going through this process should free up the refund to go through, provided the issue with the missing tax return is resolved.

State Income Tax Levy Exceptions

If you live in a state with income taxes, your refund may actually be seized by the IRS. The State Income Tax Levy Program lets the IRS levy state income tax refunds. These agreements are signed on a state-by-state basis, with local governments agreeing to let the IRS seize these funds as it sees fit.

2018 Taxes and Exemptions

If you’ve relied on the personal exemption of $4,050 for yourself and each of your dependents, it’s now gone. However, the IRS has bumped the standard deduction to $12,000 per person, which is significantly more than in previous years, so you may end up better off than you would have been under the previous tax code.

2017 Taxes and Income Requirements

If you’re filing taxes for 2017 or later, it’s important to pay close attention to the income requirements to avoid needing an IRS refund delay update down the line. If you’re single and earn $10,400 or more during the tax year, you’ll need to file a return, and that minimum goes up to $11,950 if you’re age 65 or older. Those married filing jointly will need to file a return if they earned $20,800 combined, or $23,300 if they’re both 65 or older.