What Are the Consequences of Not Filing Your Taxes on Time?

What Happens if I Don’t File My Taxes on Time?

There can be dire consequences for failing to file your taxes on time. There may be any number of reasons you were unable to meet the tax deadline, right from simple procrastination, not having enough money to pay your taxes or not having the necessary information to file your return. Whatever the reason may be, not filing your taxes on time will have serious repercussions. The Internal Revenue Service has little tolerance or understanding for those who fail to file returns on time or pay their taxes on time. There are a number of consequences for being late on your taxes or not filing returns.

Late Penalties

Let’s face it. If you are expecting a refund from the IRS, you may not face late penalties. However if you owe money, it is time to get your return filed as soon as possible. Your penalty clock begins to tick as soon as the deadline date passes, which typically April 15. Your penalty will be 5 percent of the unpaid taxes you owe the IRS for every month you don’t file your tax return up to a 25 percent cap. If you file by deadline, but don’t pay the taxes you owe, you face of penalty of up to 1 percent of your unpaid taxes each month. Those who fail to file a return and don’t pay the taxes they owe face the maximum penalty of 5 percent of their unpaid taxes for each month of delay.

Delayed Refund

If you don’t file your return on time, it goes without saying that your refund will be delayed. It’s like giving the government an interest-free loan. When you fail to file your tax returns on time, you are also denying yourself the money you deserve to get back from the government. It’s money you could be spending, saving or investing for a higher return. It’s also important to remember that just because you are entitled to a refund, you can keep it on hold indefinitely. The IRS will give you three years after the tax year for which you receive a refund. Once this window is gone, your refund will be viewed as a donation to the IRS and you won’t be able to get it back. In other words, you’ll be forfeiting or giving up your tax refund.

Substitute for Return

Those who fail to submit their tax return by the deadline will most definitely receive communications from the IRS reminding them to file. However, if you still don’t file, the IRS might file what is known as a substitute for return on your behalf. This essentially calculates what you owe based on your taxable income and any penalties that apply.

Contacting an Experienced Tax Lawyer

However, this type of return is not in your best interest because it doesn’t take into consideration deductions and tax credits that may bring down what you owe. With a substitute for return, you may be paying more taxes. If you get a notice from the IRS that it performed a substitute for return, it is still possible to file your tax return and claim your expenses and deductions. Typically, the IRS will make the necessary adjustments. But, you must act quickly.

Please remember that your consequences could be even more serious, particularly if you owe $25,000 or more in taxes. This could result in the IRS garnishing your wages, seizing your assets or even arrest and jail time on tax evasion charges. If you have not filed your taxes or owe taxes to the IRS, our experienced Florida Tax Attorneys can help you come up with reasonable and feasible solutions. Call us for a free and comprehensive consultation.