Missing the tax return filing deadline can have serious consequences, whether you are owed a refund or have a balance due. If you haven’t yet filed your tax return this year, consider these five reasons to file your tax return on time.
Get Your Refund (Before It Expires)
You don’t have unlimited time to claim your tax refund check. If you don’t claim it within three years, you lose any rights you had to that refund money. You can’t even apply it to your outstanding tax debt balance.
So, for a tax return due April 15, 2019, you’d have until April 15, 2022, to claim your refund check before it expires.
Avoid Penalties and Interest
If you have a balance due on your return, you’ll face the following additional costs by missing the tax filing deadline:
- Failure-to-file penalty of 5% per month
- Failure-to-pay penalty of 0.5% per month
- Interest (rates are set quarterly)
As you can see, the failure-to-file penalty is much larger than the failure-to-pay penalty. This penalty structure encourages you to file on time, even if you can’t pay your taxes.
Avoid the Substitute for Return (SFR)
The SFR is a return the IRS files for you. They’ll only do this if you don’t file voluntarily and they have information that suggests you should have filed a tax return.
The SFR is generally unfavorable to taxpayers because it doesn’t give you deductions for things the IRS doesn’t know about like business expenses or charitable contributions. Once the SFR is filed, the IRS can send you a bill and start the collections process.
Protect Your Assets and Wages
If you don’t pay a bill by the deadline set by the IRS, your assets or wages could be in jeopardy. The IRS can seize your bank account funds, take a portion of your wages from every paycheck until your balance is paid off, or file a tax lien against your property.
If you are really uncooperative, the IRS even has the power to take funds out of your 401(k) or IRA.
Qualify for Tax Resolution Programs
The IRS might reject your tax settlement offers if you have unfiled tax returns. They aren’t going to accept an installment agreement request or Offer in Compromise until they know how much you owe for all tax years.
Contact a tax resolution attorney to discuss your options and get your delinquent tax returns filed.
Get help settling your tax debt by calling The Gartzman Law Firm at (770) 939-7710. We can help you protect your assets and find a creative solution to your tax problems.