The Consequences of Not Filing Your Taxes

Due to the number of taxpayers, you may feel that what you do will be unnoticed by the IRS. What difference does it make if you do not pay your taxes? You are not right, unfortunately, as the IRS will notice. What happens when you don't file your taxes? Where can you go for assistance - can the IRS help?

For the government, non-payment of taxes is seen as stealing and you could be penalized for this. Depending on your tax status, levels of penalties may vary :

* Filing for taxes late
* Penalties for not filing your taxes at all
* Not paying taxes



Late filing charges the least overdue fees. Only a 5% monthly interest is added to your total tax due. The IRS, however, can charge you up to a maximum of 25% as penalty. Let me illustrate this with an example. Tax returns filed on June when it is due on April 15 are charged with 15% interest.

What should you do if April 15 is fast-approaching, and you still did not file your tax return?

You may contact the IRS if you think you require additional time in filing for your taxes. You can go about this request by filling out Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return. If the request is approved, you are given until August 15 to take care of your tax returns. If you require more time, you can use Form 2688. You should process the request for extension or else you will automatically be given with the applicable fees.

You don't buy time to pay for your taxes when you request for an extension. The IRS provisions require that you settle at least 90% of the total taxable amount by April 15 or you will be burdened with a 0.5% monthly penalty. This then leads us to the next type of penalty.

For sure, it is more preferred not to pay the whole amount than not file at all. Let us use the example that you owe $5000. Just paying $1000 gives you a penalty of only 0.5% on $4000, which is a mere $20 a month. This shows then that you need to file and pay in whatever way you can.

Failing to pay your taxes after a couple of months increases the penalty by 1% per month. The IRS may request that you take action to pay, such as mortgaging assets or filing for a loan, if you continue to be delinquent on your taxes. They may need to resort to more serious collection techniques, like wage garnishment or levying bank accounts.

Before situations get that sever, ask for IRS help. They are not the Big Bad Wolf they are occasionally made out to be. You may ask for an extension to pay your taxes (from 30-120 days). You may also be able to come up with a payment plan. IRS assistance is available in different forms: installment plans, temporary delays, or Offer in Compromise. Click on the IRS site for additional information on these options.

The consequence for not even bothering to file your taxes is most critical. You will be charged 5% of the amount you owe, per month. The maximum penalty for this infraction, however, is 25%. Say you owe $5000 and have been five months late in filing. To calculate your penalty, you need to multiply 5000 by 25%. This costs you a whopping $1250 on top of your bill. More importantly, this situation does not make it easy for you to ask for help from the IRS.

The IRS, however, extends its hands to those who repeatedly refuse to file for their taxes. The agency can fill out a return and computes the bills with applicable fees and sends this to the person. This move, on the other hand, eliminates the benefits that a good tax payer is entitled to. If this doesn't work, the IRS can then file for criminal and civil charges against the person.With all these serious consequences, it is next to none to ask help from the IRS so you can arrange for favorable alternatives before your tax obligations goes awry.