Karla Renée Bennett, MBA Kevin H. O’Leary, CPA Renée A. Green, CPA
Rhyme or Reason to IRS Penalties for Late Filing?
MY Filing deadline is NOW! I don’t have all my tax information! I will wait until I get my other information…
This will put you in a late filing status and cost you much more money! Penalties for late filing of a tax return can be very steep whether you owe more in tax or not. Examples of not owing but still costing high penalties are: Partnerships and Sub-Chapter S Corporations with no tax; the late file penalty is $195 per month per partner or shareholder. (ex. 4 Owners x $195 = $780 ea. mo. late filed)
The simple and best thing to do is to file an extension. You don’t need a reason at all if filed on time. You can do it yourself or have a tax professional file your extension at any time up to the filing deadline. After the extension you may file your return any time before the next deadline! Better not to wait until the last minute before your extended deadline. File ASAP after extension!
I owe but I don’t have the money to pay my taxes due! I will wait until I have the funds…
Again the late filing penalty will jump up to bite you. In addition you increase the penalties by adding failure to pay penalties. This means two penalties for late filing!
The first failure to pay penalty is applied to failing to have sufficient withholding on wages or failure to make sufficient quarterly payments. If you have a balance due to the IRS of $1,000 or more, this penalty will apply. The second penalty applies if you fail to pay or make appropriate arrangements by the tax filing deadline. Note that if you extend your filing deadline, you do not extend the payment due date.
In this case, the best thing to do to avoid problems is to make arrangements to pay the balance due in installments. The IRS makes installment arrangements fairly easy and the terms are actually very reasonable. Note that any balance due will generate interest until paid. You or your tax professional can set up an installment plan and submit it with your tax return.
I have a letter from the IRS! I am too afraid to open it…
Don’t take an IRS letter lightly! Open it and act on it immediately. Do not wait until the deadline date to act on the letter! Remember that the IRS is looking for the money you owe. They do not want to put anyone in jail unless they owe an exceptionally high tax debt. Call them or take your letter to a tax professional and you’ll reduce adding to your anxiety through ignoring the problem. It will not just go away. The IRS will become more demanding and possibly garnish your income directly from its source!
What’s the best approach to dealing with the IRS? I am unsure…
You should always seek to comply with the tax laws. Many people thought they could ‘get away with it’ and we often read about them in the news. If you think you are in a difficult situation, trying to comply with the law, a tax professional like the ones found at our firm will be able to guide you in the best way to work out the tax problem.
FOR HELP WITH YOUR TAX CONCERNS CONTACT US TODAY!