Sacramento Tax Lawyers for Income Tax Non-Filers
There are a number of reasons why previously compliant taxpayers fail to file their taxes and become non-filers. For some people, the decision is an intentional one. They may believe that they do not make enough money to be required to file or, alternatively, that they do not make enough money for the government to notice or care. Others may think that failing to file will keep the government from learning about their income. Unfortunately, none of these taxpayer assumptions are true, and even more disappointingly, these errant assumptions can subject a taxpayer to serious liability.
Other taxpayers may not file their income tax return due to a conscious decision, but because they simply forgot to file. Taxpayers who travel frequently and who may be out of the country for much of March and April can easily overlook their obligation to file. Other taxpayers may intend to file, but they may become overwhelmed or otherwise unable to complete the filing. Still, others may make some filing with the IRS, but the filing may be incomplete or rife with errors, triggering an audit or other tax issues for the individual.
Am I Required to File Income Taxes Every Year?
Most people do have an obligation to file an annual income tax return because the filing thresholds are set so low that most people’s gross income will exceed the threshold. In fact, even most people performing only part-time work are likely to exceed this level of gross income. In 2014 the filing thresholds included:
- Head of household (under age 65) — $13,050
- Head of household (age 65 or older) — $14,600
- Single filing status (under age 65) — $10,150
- Single filing status (age 65 or older) — $11,700
- Married filing separately (at any age) — $3,3950
- Qualifying widower with dependents (under age 65) — $16,350
Clearly, most individuals will have more than the above amounts in gross income on an annual basis. This means that an obligation to file taxes exists. Individuals who fail to satisfy this obligation despite sufficient income are likely to face significant fines and penalties on top of the unpaid income tax they already owe.
However, there is one more extremely important reason why people file an income tax return even when they do not have a legal obligation to do so. The only way for a taxpayer to receive his or her income tax refund is to file a valid tax return. The taxpayer has three years from the original filing date to make this filing; if they do not meet this deadline, the funds will be lost. The only way to receive a tax refund is to file your taxes.
What Can Happen if You Fail to File Your Taxes?
Taxpayers often think that their failure to file taxes or inability to include all sources of income in their tax filing will escape notice. While such a bet may have been at least feasible in the pre-computer age, it is unreasonably risky in today’s computerized world and has permitted the IRS to engage in both form-matching and information-matching. In other words, if you received a W-2 or 1099 from an employer, the IRS has also received a corresponding copy. The agency can use its computer system to detect your missed filing or that you failed to include even a single source of income on your tax return.
Individuals who have failed to file are subject to a failure to file a penalty. If the individual owed the IRS money at the close of the tax year, the individual is also liable for a failure to pay penalty. If the taxpayer engaged in additional steps to evade or defeat tax due and owing, additional penalties may apply as well. In scenarios where the taxpayer willfully endeavored to evade or defeat tax, (s)he may even be referred to IRS CI for a criminal investigation.
In any case, taxpayers who have failed to file, made incomplete filings, or who have otherwise raised red flags are likely to face an audit. That audit will uncover the unfiled taxes and any other tax issues the taxpayer may have.
Failed to File Your Taxes?
If you have not yet filed your taxes, there may still be time to correct your past mistakes and come back into compliance with the U.S. Tax Code before serious penalties are imposed. If you have already been contacted by the IRS regarding a tax deficiency or the need to submit to a tax audit, the experienced lawyers of the NewPoint Law Group, LLP, can help. To schedule a confidential, no-cost initial consultation, call us at 800-358-0305 or contact us online today.