Failure to File or Failure to Pay. Filing Your Taxes is the Only Answer
May 20, 2014
We have all heard countless tales of people avoiding income taxes: “I don’t have enough money to pay my taxes, so I wont file,” “I need additional information that I don’t have, so I wont file” “I have never filed, why start now?
Whatever the case may be for not filing your taxes, there are some serious consequences. Tax evaders can face stiff fines, criminal penalties and even imprisonment!
All too often, people believe these are one in the same. If you calculate your taxes only to realize you can pay them, still file. Why? The penalty for not filing is greater than the penalty for not paying. Generally the failure to file penalty is 5% of the unpaid tax not to exceed 25% of your unpaid taxes. It is even greater if you are more than 60 days late. The failure to pay is just ½ of 1% of your unpaid taxes.
Furthermore, the IRS reserves the right file a substitute return on your behalf which will not save you money because the substitute return will NOT include any of the standard deductions.
If you continue to pursue your personal revolt against taxation, it could cost you even more. The government has the right to recoup its money as it sees fit. It can:
- Place a levy on your bank account
- Place a lien on your home
- Seize your car boat, or any other personal or real property of value
What if I cannot pay?
If you cannot pay your bill in full, the IRS offers several solutions including installment payment plans, temporary delays, or offer in compromise.
In conclusion, FILE YOUR TAXES, regardless if you can pay the full amount or not! The consequences of failing to file are much more severe than failing to pay.
By: Tara West, CPA