5 Reasons to File Delinquent Tax Returns: There’s Still Hope if You Haven’t Paid Your Taxes This Year
By Michael Rozbruch of Tax Resolution Services
Did you pay your taxes this year? You can run, but you can’t hide from the IRS! Find out what you can do to resolve your back taxes and avoid IRS penalties.
The April 15 tax deadline has come and gone. For the millions of taxpayers who failed to file legally required tax returns, tax help is available for those who act now! Even taxpayers who received an extension for filing are not granted more time for the payment of taxes owed and may need income tax relief.
The act of not filing your tax returns can lead to more significant financial problems in the long run. Not to mention, failure to file tax returns may be construed as a criminal act by the IRS, punishable by one year in jail and $10,000 for each year not filed. Needless to say, it's one thing to owe the IRS money, but another thing to potentially lose your freedom for failure to file a tax return.
The longer you put off dealing with overdue taxes, the more serious your IRS problems will be. So I recommend filing any tax returns that are due as soon as possible to avoid additional interest, penalties and potential IRS collection tactics, such as a levy on your bank account.
With the federal budget deficit for the current year expected to top $1.8 trillion, Americans can expect more tax audits and increased IRS actions. So anyone who owes back taxes will want to avoid becoming targets of aggressive IRS collection efforts that can financially cripple them for life.
Here are 5 reasons to file your delinquent tax returns:
1) You can go to jail for not filing your taxes
Even if you haven’t filed your tax return for one year - it is still considered delinquent and could be construed by the IRS as a criminal offense. Actor Wesley Snipes didn’t report more than $10 million to the IRS and he was convicted of three misdemeanor counts of failing to file a tax return. Richard Hatch, who won the first season of CBS’s hit show Survivor, is in prison for failing to report $1 million in prize money.
The IRS goes after those U.S. taxpayers who try to avoid taxes, and Average Joes as are just as likely as high-profile individuals to be targets of the tax-collecting agency. At every level, the agency has become increasingly aggressive in pursuing tax cheats. Are you willing to lose your freedom because you failed to file your tax returns?
2) You can incur a 25% penalty for not filing your tax returns
In this economic downturn, Americans may opt to not file because they don’t have the funds to pay the taxes owed. The best thing for taxpayers in difficult financial situations to do is file their tax return, pay what they can and work with the IRS to establish a payment plan that will keep them compliant.
Additionally, if there are any delinquent tax returns that are due, they should consider filing these returns as soon as possible to avoid the wrath of any potential IRS action, such as a levy on their bank accounts.
3) You can incur additional penalties for not paying your taxes
If you fail to pay your taxes due, you will incur additional penalties for failure to pay. Taxpayers who request an extension of time to file should keep in mind that this it is not an extension of time to pay. To avoid additional penalties, taxpayers should file by the deadline and pay as much as they can, even if they are unable to pay the entire amount due. You will still have a failure to pay penalty, but it’s much less. Then you can work with a specialized tax resolution expert to help you negotiate a tax settlement.
4) You can be subject to an increased tax bill if the IRS prepares your taxes for you
The IRS may prepare a “Substitute For Return” for delinquent taxpayers, in which they won’t be able to file for all of their personal exceptions or allowable deductions. Because these returns are filed in the best interest of the government, the only deductions they'll usually see are the standard deduction and one personal exemption, subjecting them to a larger tax liability. So it’s important for individuals to file their late tax return as well as any prior delinquent tax returns as soon as possible to save money and avoid significant long-term consequences.
5) You must have all prior tax returns filed to be eligible for income tax relief
All back tax returns must be filed before the IRS will even entertain any type of tax settlement like an offer in compromise or monthly payment plan arrangement. The good news is the sooner you take care of your delinquent taxes, the less penalties and interest you’ll owe.
I believe there’s a solution to every problem. For delinquent taxpayer, it’s never too late for to resolve your tax debt and avoid IRS penalties.
For more information on receiving income tax relief or help resolving back taxes, visit www.taxresolution.com for a free tax relief consultation or call 866-IRS-PROBLEMS.
Michael Rozbruch, one of the nation's leading tax experts, is a Certified Tax Resolution Specialist (CTRS), licensed CPA in the state of Maryland and the founder of Tax Resolution Services (https://www.taxdefensepartners.com/). He teams up with an expert staff of tax attorneys, CPAs, and tax relief professionals to help individuals and small businesses solve their IRS problems with tax liens, unfiled back taxes, offers in compromise, wage levies, tax relief, delinquent returns, tax debt installment plans, bankruptcy and protecting an innocent spouse from unfair tax burdens.
[Note from HandelontheLaw.com: This article is to be used as an educational guide only and should not be interpreted as a legal consultation. Readers of this article are advised to seek an attorney if a legal consultation is needed. Laws may vary by state and are subject to change, thus the accuracy of this information can not be guaranteed. Readers act on this information solely at their own risk. Neither HandelontheLaw.com, or any of its affiliates, shall have any liability stemming from this article.]
