What Penalties Can You Face if You Fail to File Income Tax Returns?
There are myriad reasons why people forget or otherwise fail to file and pay their taxes. For some people, the failure to file comes down to a momentarily lapse. For others, travel outside of the country may have caused them to fail to hear the various pronouncements regarding the upcoming tax deadline that are made from February through mid-April. Still other people may believe that they can’t possibly earn enough to have a tax filing obligation. Unfortunately, all of these errors can cause serious tax consequences for the non-filer.
The NewPoint Law Group, LLP, is dedicated to assisting taxpayers facing serious tax consequences due to a failure to file taxes. We provide step-by-step guidance to fix your tax problems. We can negotiate with the IRS and advocate on your behalf. To schedule a free and confidential consultation, call 800-358-0305 today.
Can You Be Penalized For the Non-Filing of Taxes?
Most taxpayers have an obligation to file taxes every year. This is because the filing threshold is set so low that most people with income will earn enough to trigger a tax filing obligation. Consider that for the 2014 tax year filed in April of 2015, or thereafter in the case of a taxpayer who files for an extension, the level of gross income that triggers an income tax for a sole filer under the age of 65 is just $10,150. For a married couple filing jointly that is under age 65, the filing threshold was $20,300 – double the income tax filing threshold for a sole filer. For a taxpayer who files as head of household a gross income of just $13,050 will trigger an income tax filing obligation. However, even if a taxpayer does not have an obligation to file taxes, it is probably still a good idea to do so since the only way one can claim any income tax refund is by filing one’s income taxes.
What Penalty Can You Face for a Failure to File Your Income Tax?
For taxpayers that fail to file their income taxes despite having an obligation to make a timely filing, a failure-to-file penalty can apply. The failure to file penalty is imposed at a rate of five percent of the outstanding tax bill. This penalty is applied for each whole month or part of a month where the tax filing is due but remains unfiled.
Consider the taxpayer that misses the April 15 filing deadline and does not file for an automatic extension via IRS Form 4868. This taxpayer finally manages to submit his or her filing to the IRS on July 15. The taxpayer would be on the hook for penalties for the month of April, May, June and July because there was a part of the month where the obligation was unsatisfied.
If the taxpayer had an unpaid tax obligation, it is possible that he or she could face both a failure-to-file penalty and a failure-to-pay penalty.
How Can You Correct Tax Problems Due to Non-Filing?
How a taxpayer should go about correcting unfiled taxes depends entirely upon the tax situation faced by the individual due to their failure to file. If the taxpayer does not have any outstanding tax obligation that is due and owing, correcting the problem may be as simple as filing the missing tax returns with the IRS. However, if there was a tax obligation due and owing that was not satisfied, there is a high likelihood that penalties and interest have caused the obligation to have increased beyond the taxpayer’s ability to pay. In situations like these, the taxpayer may seek additional relief which may include an offer in compromise. In other situations where there are undisclosed foreign accounts it may be in the taxpayer’s best interest to enter into OVDP that can provide protection against potential criminal consequences of the non-disclosure. In any case, our attorneys provide individualized guidance only after a meticulous review of the matter. We strive to provide solutions to unfiled taxes that reduce the consequences and liability faced by the taxpayer.
Facing Unfiled Tax Problems?
If you have received a letter from the IRS about unfiled taxes, received an audit notice, or are simply concerned about unfiled taxes catching-up with you the experienced attorneys of the NewPoint Law Group, LLP, can help. We work to address income tax problems due to non-filing in a professional, efficient, and strategic manner. To schedule a confidential, free unfiled tax consultation, call our firm at 800-358-0305 today.