It is relatively easy to postpone the filing of your taxes. The time to organize tax documents and complete returns is sometimes hard to come by. However, if you wait too long and miss the deadline, it’s important to prepare for the consequences.
If you miss your tax obligations, the IRS can impose several penalties that will force you to pay an even higher amount to the government. Even when you can’t pay your debt in full, you should still file your taxes on time. If you face dire financial challenges, you could file an extension that allows you extra time to figure out your tax situation.
The penalty for filing late takes effect immediately after the April 15th deadline. The late penalty is calculated at 5 percent of the outstanding taxes you owe for each month delayed and is capped at 25 percent. If you file by the deadline but still owe taxes, you may be penalized 0.5 to 1 percent of unpaid taxes each month..
If you file your taxes beyond the deadline, not only will your refund face a penalty, but you will also face delayed reimbursements. This will affect your ability to save or invest your income in other revenue-generating activities.
The IRS typically gives you three years after the tax year to file a claim for your tax refund. Once this window has elapsed, the IRS will treat your unclaimed refund as a generous donation leading to the forfeiture of the whole amount.
If you fail to submit your tax returns on time or after an extension of the deadline, the IRS will attempt to contact you repeatedly and remind you to file your tax returns. If you ignore their advice, the IRS can file a substitute for return on your behalf.
Should you fail to pay a tax debt amounting to over $25,000, you could be arrested and charged with tax evasion. Additionally, you may lose your wages and assets.
Our tax resolution attorneys provide the best representation before the IRS and state taxing agencies. Contact us today for more information about our tax attorney consultation services in Salt Lake City or IRS tax help.