The TIE expires when the residence authorisation behind it ends. If you renew within the window (from 60 days before to 90 days after expiry), your legal status is maintained while the new authorisation is processed.
If you fail to renew on time, you face an administrative infraction. Not carrying valid documentation is a minor infraction (up to a €500 fine under Organic Law 4/2000). More serious infractions related to irregular stay can lead to expulsion proceedings.