It's April 16 and the Internal Revenue Service’s deadline to file income tax returns has officially passed. Today, individuals who procrastinated and filed at the eleventh hour, are likely filled with a sense of relief and satisfaction in knowing they made the dreaded deadline and don't have to deal with taxes for another 12 months. However, individuals who missed the tax deadline are likely experiencing feelings of uneasiness and dread.
An individual may fail to file a tax return for a number of reasons. However, regardless of the reason, if a taxpayer fails to take steps to file for a filing extension, he or she may be subject to hefty fines, penalties and even criminal charges.
Late tax filers who are expecting a tax refund, can breathe a sigh of relief as the IRS "doesn't assess penalties when a taxpayer is owed a refund." This doesn't mean, however, that a taxpayer can put off filing his or her 2014 income tax return indefinitely. In cases where three years elapse and a taxpayer, who was owed a refund, still hasn't filed, a tax return is forfeited.
For those individuals who failed to file and who owe Uncle Sam, it's important to act quickly. The IRS imposes different penalties for both failing to file a tax return and for failing to pay taxes. Many taxpayers who fail to file may do so because they cannot pay their taxes. However, even in cases where a taxpayer can't pay the full tax amount owed, it's important to file.
For each month that an individual fails to file, the IRS imposes a five percent late filing penalty of the total tax amount owed with a maximum penalty of 25 percent. In comparison, the IRS imposes a late payment penalty of one-half percent of the total tax amount owed with, again, a maximum penalty of 25 percent.
No one likes to file or pay taxes, but failing to do so can end up costing an individual a lot of time, hassle and money. For individuals who are contesting or struggling with tax debt, an attorney may be able to assist in helping resolve tax problems.
Source: CPA Practice Advisor, "For Taxpayers Who Missed the April 15 Deadline, Here's What To Do," Isaac M. O'Bannon, April 15, 2015