Beware The Ghost Of Tax Returns Past Due
Many of the people who fail to file their returns on time do so because they own money that they can’t pay and they assume that it’s better to delay filing their return until they have the money to pay their balance due. Some people don’t file their return because they have only a minor refund due to them and they decide that it’s not worth their effort.
Unfortunately, if you meet IRS requirements for filing and you don’t file your return you will be charged a failure to file penalty; and if you have a balance due you will also be charged a late payment penalty and interest on the past due balance that accrues daily. Interest, compounded daily, is charged on any unpaid tax from the due date of the return until the date of payment. The interest rate is the federal short-term rate plus 3 percent determined every three months. If you filed on time but didn't pay on time, you'll generally have to pay a late payment penalty of one-half of one percent of the tax owed for each month, or part of a month, that the tax remains unpaid after the due date, not exceeding 25 percent. The one-half of one percent rate increases to one percent if the tax remains unpaid after several bills have been sent to you and the IRS issues a notice of intent to levy. The ghostly apparition of Tax Returns Past Due grows and grows larger and larger each day.
What should you do to avoid being haunted by the ghost that is ever looming and seeking out non-filers? Of course the answer is to file your returns on time. If it is the first deadline of the filing season of April 15th, you have the option of filing an automatic extension of time to file and receiving six additional months to get your act in order and to get your return filed. If you do not file an extension your return is at that time already late and the penalties and interest begin to accrue and the ghost begins to grow and possibly to pursue. If you file an extension, you have the additional time until October 15th to gather your information, and if you file the return before the extended due date you are not charged a failure to file penalty but if you have a balance due you will be charged interest for the time from the first deadline until the date that you file the return with the payment. In the event that you cannot send the payment with the return you have the option to request an installment agreement by filing Form 9465 Installment Agreement Request with the return or by filing the return without a payment and when you receive a notice in your mail from the IRS, following the instructions by responding by mail or phone by the required response date and requesting an installment agreement. At that time if you can show just cause that you had a reasonable cause for your failure to pay timely you should request that the penalty be abated and the IRS may remove the penalty.
Now if you missed both the deadlines, whether you have a balance due or not you have failed to file a timely return and that big ghostly apparition is now a part of your life until you file your return and even if you know the Ghostbusters personally and you are able to convince yourself that “you ain’t afraid of no ghosts”, the fact is that until you take action to correct the situation you just never know how big that penalty and interest Ghost of Tax Returns Past Due will grow and when it will appear looking for you and your past due tax return.
I hope you're enjoying Tax Facts on the Taxing Subject of Taxes!
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