Monday, April 18 was tax day this year and, like every other year, there have been (and yet to be) late filings from citizens all over the country. Sometimes-- especially if that citizen does not owe taxes-- a late filing will not result in significant legal action. However, if you are a citizen that does owe taxes to the federal government, filing late means that the IRS could take adverse action against you. Below, let’s take a look at some hard facts about filing your federal tax return after the deadline.
There Can Be Multiple Fines
There are both failure-to-file fines and failure-to-pay fines. Failure to file is generally considered more serious and it is always recommended that you file on time, even if you know you cannot pay the taxes you are owed.
Fines Are Based on What You Owe
There is no blanket fine that is issued to everyone who files late-- the amount is based on what you owe. Generally, a failure-to-file fine is 5% of any unpaid taxes for each month (or partial month) the filing is late. Thankfully, this fine cannot exceed 25% of your total unpaid taxes.
Additionally, a failure-to-pay fine will amount to one-half of one percent of what you owe for every month (or partial month) following the deadline.
Extensions Can Help—If You Can Pay
Filing for an extension can help those who need more time to file their taxes, but in order to avoid a failure-to-file fine, but must pay 90% of the taxes you owe with your extension request. Your request must also be timely: eleventh-hour extension requests are unlikely to stop failure-to-file fines.
If You Don't Owe, You Could Still Pay
If you do not owe the IRS money and are still late in filing, you could still end up losing money. In these cases, the U.S. Treasury may keep your tax return as a "donation." In some cases, you may be issued a failure-to-file fine, as well.
Simple fines are just the beginning for some individuals who are facing serious issues with their taxes. The IRS can issue liens and levies and further adverse actions against you. At The Buchalter Law Group, our knowledgeable and efficient Brevard County tax lawyers have helped countless clients navigate their tax issues, deal with the IRS, and start on a path towards good standing with the government.
There can be a way out of your current tax issues. Call us today to start exploring your legal options.