Whether you didn’t have the required information or enough money to pay your taxes, if April 15th has passed and you haven’t filed your taxes, you could be facing some very serious consequences. Tax evaders can face criminal consequences that include fines and imprisonment, and civil penalties. Despite what tax evaders think, you are required to pay taxes on the income you receive each year.
If you calculate your taxes and realize you won’t be able to pay the balance, not filing is not the answer. You wind up paying 4.5% for not filing and 0.5% for paying per month. The penalty for not filing can ultimately add up to 47.5%. Interest, increased daily, is added on to any payment you owe from the due date of the return till the time of payment.
If you fail to file, there’s a possibility that the IRS will file a substitute return for you. Because the IRS won’t be eager to save you any money, the substitute return won’t contain any standard deductions a return normally would include. You’ll end up with a higher tax obligation because a substitute return only allows one exemption: single or married filing separate.
If you are unable to pay your bill in full, there are other options than not filing! Depending on your situation, the IRS might offer one of these opportunities:
• Installment Agreement This option allows you to make smaller, manageable amounts to pay off your bill.
• Temporary Delay This route delays the collection of your bill if the IRS concludes that you can’t pay any of your debt. Your ability to pay is still reviewed during this time. The IRS could also file a Notice of Federal Tax Lien. This is used to guard the government’s interest in your assets.
• Offer in Compromise If you qualify, your unpaid tax accounts will be settled for less. There is a $150 application fee that is charged when you file for this.
If you are in need of legal advice concerning your tax situation, contact Attorney Bruce Gage by calling 978-961-0093.