The IRS imposes a stiff penalty on taxpayers who owe and don't submit a return. By Kevin McCormally, Chief Content Officer April 12, 2007 Editor's note: This is the transcript of Kiplinger Editorial Director Kevin McCormally's commentary on the April 11 broadcast of Nightly Business Report.It's a sickening feeling ... finishing your return and discovering that you owe more tax than you can afford to pay. Some people's solution -- to simply not file -- is a bad idea. The IRS reserves some of its toughest penalties for failure to file. At 5% a month of the unpaid tax -- or $50 a month for every $1,000 you owe -- it's 10 times higher than the penalty for failure to pay on time. You could, of course, pay what you owe with a credit card. But fees are stiff and interest on the card could eat you alive. Another alternative is to file a Form 9465 with your return, asking the IRS to set up an installment payment plan. The government just jacked up the one-time fee for setting up such plans -- from $43 to $105 -- and you'll owe interest and a late-payment penalty until your taxes are paid off. But it could be cheaper than other borrowing ... and it sure beats the fear of doing nothing and worrying when the IRS is going to catch up to you. Advertisement Now, one big group of non-filers has nothing to fear from the IRS. This is the 2 million or so workers who fail to file each year even though they have refunds coming. There's no penalty for failing to ask for your money back ... except the loss of your money. Right now the IRS is sitting on $2.2 billion of unclaimed refunds from 2003. If the taxpayers don't file a return to claim their money by April 17, the government gets to keep it. Why would anyone fail to file when they have money coming back? I'm sure many of these folks failed to file in earlier years and think they're in trouble. If you know someone who might be losing money by avoiding the IRS, you might want to call their attention to this commentary. Maybe they'll take you to dinner with their 2003 refund. See Kevin's previous tip.