Our tax attorneys understand that there are various reasons why people sometimes fail to file tax returns. In some cases the person may not be able to pay the amount of taxes owed, or he or she may have erroneously believed that filing was not necessary for that particular year. If you have not yet filed your tax return, regardless of the reason, there are some things you can do to avoid serious problems with the IRS. Below are some repercussions you may face for not filing, as well as some helpful information about how to correct the problem and get back in good standing with the IRS:
Interest and Penalties
If your return was not filed by the due date and you did not apply for an extension, you will likely be subjected to a failure-to-file tax penalty. Additionally, interest is also added to any taxes that would have been owed. Unfortunately, this interest can also be charged on the penalty itself. If you are due a refund, there is no failure-to-file penalty; however, you may lose your refund if your return is filed after the statute of limitations has expired, which is typically three years. Regarding the IRS’s assessment and collection of outstanding tax balances, there is no statute of limitations. This means that the IRS can pursue the collection of back taxes at any time.
Payment Arrangements May be an Option
If you did not file because you owe taxes, you should still file as soon as possible, even if the deadline has passed. In most cases, the IRS is willing to make payment arrangements if you owe taxes you cannot afford to pay, but by not filing at all you are only making the problem worse.
Getting Fees Waived
Penalties for failing to file are not always set in stone. If you did not file your return on time, you can request that the IRS not charge you the typical penalty, provided this is the first year you have filed late. This is referred to as “first-time abatement.” The IRS may also waive such penalties if you have a reasonable argument for why you filed late.
If you are not sure whether or not you must file a return, you can visit the IRS.gov website to find out. You can also seek the advice of a tax attorney who can help you with this problem, as well as assist you in establishing a payment arrangement if you do end up owing back taxes.
Why You Should File as Soon as Possible
Fortunately, you can get back in good standing with the IRS by taking certain action yourself or seeking the advice of a tax attorney to help you remedy the situation. Obviously, filing your return immediately, even though it is late, is your best course of action. You must carefully prepare the return and make sure it is accurate, as you are already at a disadvantage for filing late. Make sure your return matches the records at the IRS, and that all your taxable income is appropriately reported.
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