The IRS can do many things, they are the largest collection agency on earth.  They can levy your bank accounts,  garnish your wages, file tax liens against your home and property, they can seize your home or business, they can summons you to appear in front of them, they can sue you in a civil court and get a judgement against you.  And finally if the situation is severe enough they will charge you criminally and put you in jail.

If you have unfiled tax returns the IRS will usually send letters requesting that you file.  If you fail to respond the IRS will then search their database for income reported to them by payers under your SSN, once located they will then create and file a tax return on your behalf with zero deductions and using the maximum tax rates, this is known as a substitute for return, or SFR.   Once this tax is assessed the IRS will then begin enforced collection actions.

If you have unfiled or late taxes due, and you have not contacted the IRS to make payment arrangements, the IRS will begin sending threatening letters which eventually will lead to phone calls and possibly even assignment of your case to a local Revenue Officer.

Second it also expanded the definition of “streamlined installment agreements” raising the threshold so that it was easier to get a payment plan without the burdensome financial reporting requirements.

And third, it raised the ceiling for when the IRS is required to file a tax lien against a taxpayer.

Late filing penalty is 22.5% of IRS unpaid tax, the late payment penalty accrues at .5 % per month capping out at 25% of the unpaid tax. There are also negligence and fraud penalties at 20% and 75% of the unpaid tax.