What Are the Consequences for Not Filing Your Taxes?
We are attracted with the thought of not paying taxes because there are so many taxpayers.Surely, you would think you will not be noticed. You are dead wrong, however, as the IRS will know. It is then important to know what the consequences for not filing your taxes are, what you need to do if you were not able to do this obligation, and where to go for assistance.
For the government, non-payment of taxes is considered stealing and you could be penalized for this. Depending on your tax status, levels of penalties may vary :
* Penalties for filing your taxes late
* Not filing for taxes at all
* Not paying taxes
Grave consequences develop as a result of not paying your taxes, aside from the fact that you will be labeled as a delinquent tax payer. Let us tackle one by one the above-mentioned penalties.
The penalties for filing your taxes late are so far the simplest to deal with. The IRS charges you with a monthly fee of 5%. For instance, a 15% interest will be charged to you if you filed on June and it is supposed to be submitted on April 15.The maximum penalty is 25%.
What alternatives do you have if you still have not filed your tax return and it is almost April 15?
This is an area where you can use IRS assistance by requesting for an extension. You simply have to accomplish Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return.You then have until August 15 to file. For more time, you can use form 2688.If no request is forwarded to the IRS, the 5% penalty starts accruing.
It is important to remember that requesting for an extension doesn’t give you more time to pay your taxes. By April 15, you must pay for at least 90% of your dues. Otherwise, you will be charged with a 0.5% penalty. This brings us to the next penalty, which is for not paying what you owe.
Certainly, not paying the whole amount is better than not filing at all. Let us use the example that you owe $5000. Paying only $1000 generates a mere $20 charge, which is 0.5% multiplied by $4000. Thus, it is important that you file and pay your taxes whatever way you can.
Failing to pay your taxes after a couple of months increases the penalty by 1% monthly. The IRS can request that you take action to pay, such as mortgaging assets or getting a loan, if you continue to be delinquent on your taxes. They may also make use of other more serious methods like wage garnishment or levying bank loans.
When the situation gets really bad, the IRS can very much help you. Extensions ranging from 30-120 days and assistance in laying out a payment plan may be provided Installment plans, temporary delays and Offer in Compromise are yet other alternatives that can be tried out. For more information, visit the IRS site. All these only point out that the IRS, indeed, is nothing like the way they are portrayed to be.
The most serious penalties are imposed to those who do not even bother to file for their taxes. This situation will cost you large amounts of money, aside from making it hard for you to ask for IRS assistance. 5% – 25% of the total taxable amount is charged to you per month. Note the case of a person owing $5000 and is 5 months late for filing. Total penalty is 5% times 5 times $5000. This gives you another $1250, more than 20% of the original taxable amount.
The IRS may fill out a return and send the bills and fees to a tax payer who, over time, refuses to file. The IRS-completed return will not offer the taxpayer deductions he would otherwise be entitled to.The IRS may press for criminal or civil charges should the above option prove to be unsuccessful. Before your tax situation gets to this point, ask for IRS assistance. There are always options that you can arrange to pay what you owe without facing the serious consequences.
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