NEW

PRESS RELEASE: Cassidy Jakovickas, CPA of Fresno, CA Appointed to Intuit’s Accountant Council

Select Panel Advises on Products and Services that Accountants and Their Clients Want Most             FRESNO, CALIFORNIA – June 4, 2019 –Today, Intuit, Inc (Nasdaq: INTU) announced that Cassidy...

Beyond The Numbers: What We’ve Been Reading

Although our team loves using numbers and spreadsheets to help our clients make the best financial decisions, we also enjoy reading great books. Staying well read on both fiction and non-fiction books helps us hone our imagination and introduces us to new, sometimes...

Looking Back At April

It’s hard to believe that we’re at the end of April, but it’s true! This month, we helped our clients wrap up another great (and busy) tax season. There was, as always, a lot of paperwork, emails, and nail-biting involved in the days preceding April 15, but that’s all...

5 Last-Minute Tips For Filing Taxes in 2019

Well, April 15 is almost here, and the tax-related panic is thick. If you haven’t filed your 2018 tax paperwork and are rushing to get your taxes in by the deadline, we’ve decided to give you some last-minute tax advice that will hopefully help ease your stress....

An Introduction To Cybersecurity for Business Owners

Keeping your sensitive business and customer data secure has never been more critical. Whether you are a small business or a national corporation, you can't relax your defenses against those criminals seeking to take advantage of lazy cybersecurity policies. Virtually...

March News Roundup

Wow! It seems like we just started March and we’re already moving into April! As we move into the final stretch of tax season, we’re recapping this month’s news for you, just in case you missed it amid the tax-related hubbub. MBS Accountancy: November Review This...

4 Key Changes To Depreciation Under The TCJA

As the Tax Cuts and Job Act (TCJA) continues to be unraveled by tax professionals, it’s important to review the changes and their implications on business operations and tax strategies. In this article, we’ll highlight TCJA’s changes to first-year bonus depreciation,...

3 Ways A CPA Can Make Your Business Successful

It can often seem unnecessary to hire a certified public accountant (CPA) since bookkeepers and accountants are frequently believed to be the be-all-end-all for a business’ finances. However, there are certain advantages to having a CPA by your side. While we...

3 Myths You Shouldn’t Believe About Accountants

To a business owner, an accountant that helps make sense of business finances can seem like a godsend. Whether you’re just starting your business or are already established, having a great accountant by your side is a sure way to keep your business running smoothly....

3 Ways QuickBooks Apps Can Improve Your Business’ Efficiency

Over 5.6 million businesses use QuickBooks to streamline their business’ accounting. The eye-pleasing interface, streamlined workflows, and powerful automation that QuickBooks provides to these business owners are invaluable, saving them time and money. While...

What Happens if you Don’t File a Tax Return?

Reading Time: 3 minutes

Most individuals should file a U.S. tax return by April 15th of each year to the Internal Revenue Service. If an individual owes taxes and misses the deadline, the IRS can impose various penalties. If an individual does not owe taxes or is entitled to a refund, missing the deadline may still be a problem.

What if I don’t owe taxes?

Taxpayers who do not owe taxes should still file a tax return by the deadline. First, you may be entitled to a refund and missing a potential payment from the government is a penalty in and of itself. Next, you may also be entitled to the Earned Income Tax Credit which is paid to many individuals who have earned income from employment or self-employment; the Earned Income Tax Credit will not be paid if you do not file a tax return. At some point, the IRS may file a “substitute return” for you and the IRS may then believe that you do owe taxes.

Substitute Return

The IRS can file a “substitute return” on your behalf. They will use any information they have regarding your income for the year, such as the income reported by your employer or any interest or dividends from financial institutions. Unfortunately, they will probably not include other information that would reduce your taxable income such as charitable contributions, educational or childcare expenses, or mortgage interest. Consequently, the IRS will think you owe much more than you really do, and they will impose penalties and interest on top of that amount.

The IRS can then begin to collect that amount by seizing your bank account, reaching into your paychecks or even filing a tax lien on any real estate you own. They can impose these levies just days after they demand payment from you. Even if you cannot afford to pay their taxes by the deadline, simply filing a return may reduce the amount of taxes you owe.

What else can happen if I don’t file a tax return?

The United States Code sets forth civil and criminal penalties for those who do not file tax returns on time. The Internal Revenue Code section 6651 allows the IRS to impose a penalty of 5% of the taxes that would have been due on the tax return for every month the tax return is late, to be capped at 25%. This is a civil penalty and may be imposed whether or not the failure to file was willful or fraudulent. If it is found that a failure to file is fraudulent, the penalty will increase to 15% of the tax for each month, and can be as high as 75% of the total tax.

Section 7203 provides criminal penalties for those who willfully fail to either file their tax return or pay their taxes on time. In addition to the civil penalties listed above, the taxpayer may be found guilty of a misdemeanor and may be fined up to $25,000 and/or sentenced to prison for up to one year.

What if I can’t pay the taxes I owe?

If you can’t pay the taxes you owe by April 15th, the IRS may have options for you. You can enter into an installment agreement with the IRS which will allow you to pay your taxes a little at a time over several months. If they consider you unable to pay, they may be able to delay the amount due altogether. As a last resort, you may consider an “Offer in Compromise” which settles your debt for less than the full balance. Refer to our blog “Tips for Taxpayers Who Can’t Pay Their Taxes on Time” to learn about your options in more detail. Schedule an appointment with us to find out what will work best for you.

Source: http://cbsloc.al/1dE5DMj, Stephen M. Moskowitz, Esq. on February 14, 2013,11:25 PM

Previous

Next