The Canada Revenue Agency can be quite persuasive if you downright refused to file your tax return. Take the case of a Mr. John Hardy of Saskatoon. According to a CRA news release dated May 17, 2010, the taxpayer was fined $6,000 in a Saskatoon Provincial Court for failing to file his 2005 to 2007 tax return.

On April 23, 2010, the CRA also announced 19 Atlantic Canadians were convicted for failing to file tax returns, resulting in 11 months of jail time, 12 months of house arrest and fines totaling $95,257.

There are two points to be gleaned from these prosecutions. Firstly, the CRA is passionately looking for your missing tax returns and will use the courts to win you over with hefty fines and free promotion on their website. Secondly, the fine levied is in addition to the taxes, interest and late-filing penalties owed.

In practice, the CRA does not drag you off to court the moment your tax-filing deadline has past. The CRA will send you two written notifications asking you to file if you are late. Ignore those and you will receive a final demand letter by hand delivery or registered mail. Ignore that and you will be facing the music in court.

You could be fined $1,000 to $25,000 and face jail time of up to 12 months if you are hauled into court for ignoring the CRA's overtures. This brings us to a question I received last week from a TaxBreak reader: "How do I get about filing for the last five years of tax returns? I am fairly sure I do not owe." To appreciate the response (below), you need to understand what the CRA does when you do not file a tax return.

The CRA has your numbers. If you don't file your tax return, the CRA automatically calculates your taxes using the various income slips - T4, T4A, T5, T3, T4RSP, etc. - that were issued to you.

If this stealth calculation shows you owe taxes, you will receive notifications to file. If you choose to play dead, you will end up with a costly date with a totally unimpressed judge. If the CRA's calculation yields a tax refund, no further action is taken by the CRA.

Therefore, the enquirer's assumption - that he does not owe taxes - is likely correct if the CRA has not contacted him. He has money in the bank, so to speak, with a catch.

The tax laws prevent the CRA from assessing a tax return that has a refund if it is not filed within ten years. For example, you can kiss the refund on your un-filed 1999 tax return goodbye because its filing shelf-life expired on December 31, 2009.

An unfiled return with taxes owing, unfortunately, has no expiry date. You will pay up sooner or later if you owe.

Back to the question - how do I file? Do what 26 million Canadians do each year and that's to complete those tax returns and send them to the CRA before they reach their 10-year deadline if you want those refunds. If the tax slips from those years are missing, call the CRA today - and the slips will be in your mailbox in two weeks.