Some individuals do not need to file a tax return each year. However, the majority of individuals and business owners will need to file a tax return in a timely fashion or face consequences. Unless it becomes a criminal conviction, you will not face jail or prison for failure to file taxes, but you will be assessed a Failure to File Penalty. In most cases, this penalty is 5% of their unpaid tax liability for each money that their return is late, up to 25%.