Many taxpayers are highly conscientious regarding tax deadlines and ensuring that all obligations are squared away in a timely manner. Other taxpayers may take a more relaxed approach to their taxes but nevertheless successfully manage to get their taxes filed. However, forgetting to file one’s taxes can carry serious consequences.
And yet, people still choose to file and handle their own taxes. Perhaps this is because when people handle their own taxes, there are a certain tangible and immediate cost savings because one does not need to pay for the services of a tax lawyer, accountant, or CPA. However, the apparent savings may be an illusion since it is possible that a tax professional could leverage his or her years of knowledge and experience to secure tax savings equal to or greater than the fee. Furthermore, the value of peace of mind regarding one’s tax obligations cannot be understated.
The tax attorneys of NewPoint Law Group, LLP can help taxpayers address all tax, foreign account disclosure, and related obligations. To schedule a free and confidential initial consultation, please call 800-358-0305 today.
The IRS May Complete Income Taxes on Your Behalf
If you have failed to file your taxes, there is a chance that the IRS will complete an income tax return on your behalf. For many taxpayers who are unfamiliar with the IRS’s practices, this might sound like a great deal. Unfortunately, the practices of the IRS nearly ensure that this filing will be highly unfavorable and likely to produce a significant tax obligation. This is because the IRS will not prepare your taxes to your benefit meaning that they will not typically characterize income in a favorable manner, claim tax credits, or tax deductions you would otherwise be entitled to receive. Generally, the IRS completing taxes on the behalf of a taxpayer produces a large tax bill.
You Will Likely Face a Failure to File and a Failure to Pay Taxes Penalty
If you miss the tax deadline, you are also likely to face a failure to file taxes penalty, a failure to pay penalty, or both. It is important to recognize that Tax Day represents the arrival of two separate duties: the duty to file taxes and the duty to pay taxes. When a taxpayer fails to make a timely tax filing a penalty of 5 percent of the unpaid taxes for each month or part of a month that a return is late can be assessed. This fine is capped to not exceed 25% of the unpaid tax obligation. However, if you file more than 60 days after the due date, the minimum penalty is lesser of $135 or 100 percent of the unpaid tax. In addition, a taxpayer who has a tax balance due and owing can also face a penalty for a failure to make a timely tax payment. This penalty is assessed at a rate of 0.5 percent for each month or partial month where the obligation remains unfulfilled.
However, it is also important to note that taxpayers may be able to avoid these penalties, provided that they can make a sufficient showing of reasonable cause. To qualify for this relief, the failure to file or pay taxes must not be attributable to “willful neglect.”
You Will Be Unable to Obtain a Tax Refund You Would Otherwise Be Entitled to Receive
Another consequence of failing to file taxes is the fact that you will be unable to claim any tax refund that you would otherwise be entitled to receive. This means that taxpayers who were counting on receiving a refund check for hundreds or thousands of dollars may be left scrambling to address their unexpected financial shortfall. However, the good news is that the funds are not necessarily lost forever. If you make a tax filing within three years of the original filing date, you will be able to obtain your tax refund. However, if you fail to file the tax return for more than three years after the original filing date, then the refund will be lost permanently.
Work with Tax Attorneys to Handle Filing Tax Returns and Get Caught up on Missed Filings
Tax problems will only get worse if you do not address them head-on. If you have missed filing tax returns or have otherwise run into serious tax problems, the attorneys and tax professionals of NewPoint Law Group, LLP can help. To schedule a free and confidential consultation at our Folsom or Roseville, California law offices, please call 800-358-0305 today.