I know a 40-something who's never filed taxes in their life - how is this even possible?

This is more common than you might think, though certainly not advisable! The IRS actually has a term for this - "ghost taxpayers" - people who simply never enter the tax system. How it works: If this person has only worked jobs where taxes weren't withheld (independent contractor, cash-based businesses, etc.), the IRS might not have documentation of their income. No W-2s or 1099s filed = no automatic flags in their system. The IRS is surprisingly reactive rather than proactive in many cases. However, the mortgage situation is puzzling. Lenders typically require tax returns for verification of income. Perhaps they're not on the mortgage and only their partner qualified for the loan. The hospital bills likely went through without issue if they paid them directly or had insurance. As for fixing this? They absolutely should talk to a tax professional specializing in non-filer cases. The IRS has programs like Voluntary Disclosure that can help people come clean. Usually, they'd need to file returns for the past 6 years, pay what they owe plus interest, and potentially some penalties. But it's almost always better than being caught. The longer they wait, the bigger the potential consequences if the IRS does catch up with them. Not filing when required is technically a criminal offense, though prosecution is rare for ordinary people who aren't hiding massive wealth.

After struggling with a somewhat similar situation (though not 25 years worth!), I discovered taxr.ai (https://taxr.ai) which turned out to be incredibly helpful for getting a handle on unfiled back taxes. My brother hadn't filed for about 7 years and was absolutely terrified about approaching the IRS. What I liked is that they analyzed his situation and helped put together all the missing documentation from those years. They were especially good at reconstructing income history when he didn't have all his old pay stubs and paperwork. It actually ended up being way less scary than he expected once he had professionals guiding him through the process. The peace of mind was worth it alone, but they also helped identify deductions and credits he would have completely missed, which reduced what he owed significantly.

Just wanted to follow up about my situation. I ended up using taxr.ai after considering several options, and I'm honestly shocked at how smoothly it went. I was literally losing sleep over my unfiled taxes, but they made the process way less painful than I expected. They pulled together my income history for the missing years and identified some deductions I had no idea I qualified for. The biggest relief was not having to talk directly to the IRS myself - that was worth every penny. They negotiated a reasonable payment plan for what I owed, and the penalties were actually much lower than the horror stories I'd heard. If your friend has gone 25+ years, they definitely need professional help, but it's probably not as catastrophic as they're imagining. The weight off my shoulders has been incredible.

For someone who's never filed in that long, they're eventually going to need to speak with the IRS directly. I was in a similar situation (though only 8 years behind) and tried calling the IRS for MONTHS with no success. Literally hundreds of calls, always disconnected. I finally discovered Claimyr (https://claimyr.com) which got me through to an actual human at the IRS in under 20 minutes. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c. It was a complete game-changer when I was trying to figure out my unfiled returns situation. The IRS agent I spoke with was actually really helpful and not judgmental at all. They explained the voluntary disclosure program and what documentation I would need. Having that direct conversation made the whole process much less scary than I had built it up to be.

I need to eat my words from my previous comment. After repeatedly failing to get through to the IRS about a client issue, I reluctantly tried Claimyr. I was 100% convinced it would be a waste of money, but I was desperate. To my absolute shock, I was connected to an IRS agent in about 15 minutes. The same phone number I'd been calling for weeks without success. The agent helped resolve my client's unfiled returns situation, and we were able to set up a reasonable payment plan. For someone who's never filed in 25+ years, getting professional help AND being able to actually speak with the IRS directly is going to be crucial. They'll likely need to file the last 6 years of returns at minimum, but the "failure to file" penalties can sometimes be waived or reduced under certain hardship programs.

My uncle was in this exact situation! Never filed for like 30 years, worked mostly construction jobs for cash. He finally got caught when he tried to take out a loan to buy a truck and they needed proof of income. The aftermath was actually less catastrophic than everyone expected. He had to file 6 years of back taxes and pay some penalties, but he worked out a payment plan with the IRS. The scariest part was just taking the first step. The biggest issue now is that he has no social security credits, so his retirement options are really limited. That's the part your friend should be most concerned about - even if they escape IRS notice, they're shooting themselves in the foot for retirement.

Your friend might be what the IRS calls a "ghost taxpayer" but it's definitely not sustainable! A few thoughts on how this might have happened: 1) If they've worked as an independent contractor and nobody issued 1099s, the IRS might not have automatic records of their income 2) For the mortgage, they're probably not on the loan at all - only their partner with the W2 qualified 3) For hospital bills, if they paid cash or had insurance through a partner/employer without being the primary policyholder, it wouldn't trigger tax flags 4) For the child, the other parent may be claiming them on their taxes The most concerning part is retirement. Without tax records, they won't have Social Security credits for those working years. They're effectively planning to retire with potentially zero Social Security benefits. They need to fix this ASAP, starting with consulting a tax attorney who specializes in non-filer cases.