"I haven't filed a tax return for several years." Major media outlets don't tackle this frightening-to-even-search topic head-on (because those who fail to file are not their customers). But there is a fact we want you to know: if you voluntarily file before the tax office finds you, the penalty is only 5% of the principal tax. Once you are found, it is up to 30% — plus 40% if malicious. In other words, the system is designed so that "whoever files first wins." This article explains the concrete steps for getting back on track.
① Voluntary filing before you receive notice of an audit → only 5% failure-to-file additional tax[NTA No.2024].
② After advance notice of an audit → 10% (15% on the portion over ¥500,000; 25% on the portion over ¥3 million).
③ After being audited → 15% / 20% / 30% on the portion over ¥3 million. And if there is disguise or concealment, a heavy additional tax of 40%.
④ On top of that, delinquency tax (2.4% a year; 8.7% after two months) accrues on a daily basis, so the longer you wait the higher it certainly becomes.
⑤ The statute of limitations (the time limit for correction or determination) is in principle 5 years, or 7 years if there was fraud. "Getting away with it" is not realistic in an age of information reporting.
Why you "get caught" (how information reporting works)
The hope that "maybe it won't be found out even if I don't report my income" no longer holds up against the mechanism by which information flows to the tax office from the other party to your transactions.
| Your income | Route by which the tax office learns of it |
|---|---|
| Freelance fees | Payment records (shiharai chosho) and withholding records submitted by your clients, and transaction data of your invoice registration number |
| Flea-market apps, skill marketplaces, delivery, etc. | Transaction-information reports from platforms (high-value or repeat sellers, etc.) |
| Overseas accounts, overseas FX, overseas crypto exchanges | Automatic exchange of account information with each country's tax authorities under the CRS (Common Reporting Standard), and the report of overseas remittances for amounts over ¥1 million |
| Real estate, stocks, insurance proceeds | Registration information, the annual transaction report for specified accounts, and payment records |
| Deposits into bank accounts | The authority to inquire of financial institutions at the time of an audit (past periods can also be traced back) |
In fact, the National Tax Agency has publicly designated audits of those who fail to file as a priority, and it has also shown that the average amount of unreported income in failure-to-file cases is large[NTA audit status]. The later the timing of discovery, the deeper the wound as delinquency tax piles up.
The full picture of the penalty (compared in numbers)
- Voluntary filing right now: principal tax ¥1 million + failure-to-file additional tax of ¥50,000 + delinquency tax (for the period)
- Discovered by an audit (3 years later): principal tax ¥1 million + failure-to-file additional tax of ¥175,000 (¥500,000 × 15% + ¥500,000 × 20%) + delinquency tax of roughly ¥200,000
- Deemed to be hidden sales (heavy additional tax): principal tax ¥1 million + heavy additional tax of ¥400,000 + delinquency tax (fraud carries the full amount under the special rule on the calculation period) = over 1.6×
* The delinquency tax is a rough estimate calculated on a daily basis up to the payment date. Residence tax, National Health Insurance (retroactive assessment for past years), and enterprise tax also arise in tandem.
Note that people who are due a refund (over-withheld, or the medical expense deduction, etc.) are unaffected by penalties and can file for a refund at any time within 5 years. "Not having filed" does not always mean "additional tax is certain."
The steps for getting back on track (how to file after the deadline)
- ① How many years to do: In principle, the past 5 years in which you had income (the portion for which the statute of limitations has not yet run). Prepare them one year at a time within the range of records you still have.
- ② Gather your records: bankbooks, sales data, payment records, invoices. Even without receipts for expenses, if you total them up reasonably from card statements and bankbooks they may be recognized (gather rather than discard).
- ③ Prepare a return for each year: e-Tax (the tax-return preparation corner) also supports past years. Those with business income also need a statement of income and expenses.
- ④ Submit and pay: For a late return, the date of submission is the payment deadline. If paying in a lump sum is difficult, don't leave it — consult the tax office about payment (the grace system). The payment methods are the same as for an ordinary return.
- ⑤ When the scale is large, spans multiple years, or involves consumption tax: This is a situation where there is high value in engaging a tax accountant (some firms advertise that they handle failure-to-file cases).
FAQ
I've failed to file for many years. If I file now, will I be arrested?
When you voluntarily resolve an ordinary failure to file, criminal penalties almost never become an issue (what gets referred for prosecution is mainly malicious, high-value tax evasion accompanied by concealment schemes). With voluntary filing, the administrative penalty also stays within the 5% failure-to-file additional tax + delinquency tax. The most disadvantageous thing is to keep leaving it unresolved.
I threw away my receipts. Do my expenses become zero?
They do not become zero. Expenses reasonably totaled from bankbooks, credit-card statements, requests to clients for reissuance, and so on may be recognized in practice. Even if not perfect, it is important to file with records you have honestly reconstructed.
If I wait out the 5-year statute of limitations, can I get away without paying?
It is not recommended. If there was fraud the statute extends to 7 years, and delinquency tax keeps growing while you wait. With materials from the other side — payment records, platform reports, the CRS, and so on — a failure to file is easily grasped, and the penalty if discovered by an audit is more than three times that of voluntary filing.
What happens with residence tax and National Health Insurance?
When you file after the deadline, the information is shared with your municipality, and residence tax and National Health Insurance premiums for past years are also assessed retroactively. The burden increases, but the structure in which it grows the longer you leave it is the same. If payment is difficult, you can use your municipality's consultation on paying in installments.
Sources of the data
- The rates of the failure-to-file additional tax (voluntary 5%; after notice 10/15/25%; after audit 15/20/30%): NTA No.2024 When you forget to file a tax return (in Japanese) / Ministry of Finance — Overview of the additional tax system (in Japanese)
- The rate of the delinquency tax (2.4% / 8.7% a year): NTA — The rate of the delinquency tax (in Japanese)
- Priority handling of failure to file: NTA — Status of income tax and consumption tax audits for the Reiwa 5 administrative year (in Japanese)
* This article is general information intended to support the resolution of a failure-to-file status (proper late filing); for calculations of individual tax amounts and penalties, please confirm with a tax office or a tax accountant.