UNFILED TAX RETURNS
Every day the massive computer center at the IRS is getting more sophisticated, it’s just a matter of time before they catch up with you.
This is not a situation to take lightly, failing to file your tax returns is a criminal offense. If you do not file, you can be prosecuted and punished with potential jail time, one year for each year not filed. Why risk potentially losing your freedom for failing to file your tax returns?
What Happens When You Don’t File Tax Returns?
The IRS requires you to file your tax returns by April 15th every year. Filing your tax returns isn’t the most exciting think in the world but it’s important. Many people either put it off until the very last minute or fail to file altogether. Not filing your tax return can have costly consequences.
Here’s three of the penalties you may face when you don’t file your tax returns on time each tax year:
1. Late Penalties
The penalty for failing to file your tax returns or filing late takes effect on April 16th. You’ll owe the government 5% of the unpaid taxes in penalties for every month that they remain unpaid. That penalty, however, caps at 25%.
If you file by April 15th but owe the government and fail to pay the debt by that time, then a lesser penalty will be levied upon you. You can get charged between 0.5% to 1% of the unpaid tax debt for every month that it remains unpaid. Remember, you are required to file by the April deadline each year. In some cases, you can get an extension to file your taxes, but you’ll need to go through the proper channels and paperwork to do this.
2. You Could End Up Forfeiting Your Tax Refund
The IRS gives you three years to claim your back tax refunds. If you keep missing or failing to file your taxes, you will have effectively forfeited those back-tax refunds after the third year. You’re basically losing out on free money that you could most likely use.
3. Your Refund Can Be Delayed
The government can take time investigating your taxes when you consistently file late. Furthermore, the fact that you delayed filing your taxes means that there will be penalties levied. This can lead to your tax refund being delayed or forfeited altogether depending on the fines.
Even though the 5% per month penalty takes effect on the 16th of April, the IRS will still send letters with codes such as CP515, CP516, CP518 and CP515B. If you fail to act on these notices and don’t file your taxes or pay what you owe the government, you can end up facing jail time.
The fine for failing to comply with IRS can reach as high as $25,000. The jail time can be as long as one year for every year that you failed to file your taxes.
When you don’t file your taxes on time and fail to heed the warnings sent by IRS, they will prepare an SFR (substitute tax return) on your behalf. They base the information they use on the information they already have including W-2 and Form 1099.
What Should You Do When You Have Unfiled Tax Returns?
Let us give you the peace of mind you deserve by helping you get in compliance with the law. If you voluntarily file your delinquent tax returns, you’ll likely avoid further problems other than having to pay the interest and penalties.
As stated previously, if you wait for the IRS to file your returns for you, they will be filed in the best interest of the government, usually with little or none of the deductions you are entitled to.
Before anything can be done to extract you from this predicament all of your tax returns must be filed. You must be current. In most cases, you will likely owe taxes, interest, and penalties after the returns are filed. Once we see how much is owed, we’ll set a course of action to get you off the hook!
If you have unfiled tax returns and need to be sure you understand your options, click the green button below and schedule your free Tax Strategy Analysis Today!