diff --git a/lib/ansible/playbook/__init__.py b/lib/ansible/playbook/__init__.py
index 9b39e2f3225..a5882b68f03 100644
--- a/lib/ansible/playbook/__init__.py
+++ b/lib/ansible/playbook/__init__.py
@@ -146,12 +146,34 @@ class PlayBook(object):
 
     def run(self):
         ''' run all patterns in the playbook '''
+        plays = []
+        matched_tags_all = set()
+        unmatched_tags_all = set()
 
         # loop through all patterns and run them
         self.callbacks.on_start()
         for play_ds in self.playbook:
             play = Play(self,play_ds)
+            matched_tags, unmatched_tags = play.compare_tags(self.only_tags)
+            matched_tags_all = matched_tags_all | matched_tags
+            unmatched_tags_all = unmatched_tags_all | unmatched_tags
+
+            # if we have matched_tags, the play must be run.
+            # if the play contains no tasks, assume we just want to gather facts
+            if (len(matched_tags) > 0 or len(play.tasks()) == 0):
+                plays.append(play)
+
+        # if the playbook is invoked with --tags that don't exist at all in the playbooks
+        # then we need to raise an error so that the user can correct the arguments.
+        unknown_tags = set(self.only_tags) - (matched_tags_all | unmatched_tags_all)
+        if len(unknown_tags) > 0:
+            unmatched_tags_all.discard('all')
+            msg = 'tags "%s" given as argument but not found in playbooks, did you mean one of "%s"?'
+            raise errors.AnsibleError(msg % (', '.join(unknown_tags),', '.join(unmatched_tags_all)))
+
+        for play in plays:
             self._run_play(play)
+
         # summarize the results
         results = {}
         for host in self.stats.processed.keys():
@@ -292,9 +314,6 @@ class PlayBook(object):
     def _run_play(self, play):
         ''' run a list of tasks for a given pattern, in order '''
 
-        if not play.should_run(self.only_tags):
-            return
-
         self.callbacks.on_play_start(play.name)
 
         # get facts from system
@@ -315,7 +334,7 @@ class PlayBook(object):
                 for x in range(play.serial):
                     if len(all_hosts) > 0:
                         play_hosts.append(all_hosts.pop())
-                serialized_batch.append(play_hosts)                        
+                serialized_batch.append(play_hosts)
 
         for on_hosts in serialized_batch:
 
@@ -338,6 +357,6 @@ class PlayBook(object):
                     self.inventory.restrict_to(handler.notified_by)
                     self._run_task(play, handler, True)
                     self.inventory.lift_restriction()
-        
+
             self.inventory.lift_also_restriction()
 
diff --git a/lib/ansible/playbook/play.py b/lib/ansible/playbook/play.py
index d27eb0da425..cd927cf5595 100644
--- a/lib/ansible/playbook/play.py
+++ b/lib/ansible/playbook/play.py
@@ -130,7 +130,7 @@ class Play(object):
         return self._tasks
 
     def handlers(self):
-        ''' return handler objects for this play ''' 
+        ''' return handler objects for this play '''
         return self._handlers
 
     # *************************************************
@@ -197,22 +197,25 @@ class Play(object):
 
     # *************************************************
 
-    def should_run(self, tags):
-        ''' does the play match any of the tags? '''
+    def compare_tags(self, tags):
+        ''' given a list of tags that the user has specified, return two lists:
+        matched_tags:   tags were found within the current play and match those given
+                        by the user
+        unmatched_tags: tags that were found within the current play but do not match
+                        any provided by the user '''
 
-        tags_counted = 0
+        # gather all the tags in all the tasks into one list
+        all_tags = []
         for task in self._tasks:
-            for task_tag in task.tags:
-                tags_counted = tags_counted + 1
-                if task_tag in tags:
-                    return True
+            all_tags.extend(task.tags)
 
-        if tags_counted > 0:
-            return False
+        # compare the lists of tags using sets and return the matched and unmatched
+        all_tags_set = set(all_tags)
+        tags_set = set(tags)
+        matched_tags = all_tags_set & tags_set
+        unmatched_tags = all_tags_set - tags_set
 
-        # didn't tag the play, and the play contains no steps
-        # so assume we just want to gather facts
-        return True
+        return matched_tags, unmatched_tags
 
     # *************************************************