When you, the taxpayer, think of penalties for not filing taxes, you likely think of the charges associated with failing to get your income tax return filed on time. The cost for failure to file an income tax return is far greater than simply additional fees tacked on by the IRS. As you consider, “what is the penalty for not filing taxes”, consider the problems you face – monetary and personal.
From a financial standpoint, the penalty for not filing tax returns can be extremely costly. The IRS assesses not only a punitive charge, but also interest for failure to file tax returns (interest accrues on any liability not paid by the filing deadline). These additional charges can quickly inflate the total you owe and they’re difficult to get removed. But, when a taxpayer asks, “Is there a penalty for not filing taxes?” you have to weigh the costs that reach farther than additional charges.
What are the penalties for not filing your taxes? Beyond the extra money you will pay, the IRS can ultimately file your return for you. This is known as a Substitute for Return (SFR) and fills in the gaps left by returns you failed to file. “What are the penalties for not filing taxes” can quickly lead to, “how much do I owe the IRS from their standpoint?” and “what collection actions can I expect?”
The IRS has powerful collection tactics. In fact, the “not filing taxes” penalty may ultimately be a wage garnishment and/or a bank levy on your checking or savings account. And while these IRS enforcement actions aren’t defined by the IRS as a penalty, not filing taxes can lead to such collection efforts (an internet search for “what is penalty for not filing taxes?” won’t necessarily bring up these points).
The most severe penalty if you fail to file tax returns, though, can lead to jail time. Failing to file tax returns is actually illegal and punishable with imprisonment for each year that is unfiled. The IRS may not pursue this legal recourse, but it’s also not outside the realm of possibility.
If you’re simply running a little behind on getting your return in, just get it filed and pay the relatively cheap penalty. On the other hand, if your failure to file a tax return has led to aggressive IRS collections – or you have several years that still need to be filed – don’t address the situation on your own. Before you file, contact a licensed tax professional at Flat Fee Tax Service, Inc.
A Better Business Bureau accredited tax resolution company with an A Plus Rating, such as Flat Fee Tax Service, Inc., will provide you with a no cost, no obligation consultation to review your income tax problem. Negotiating a fair resolution with the IRS can be tricky, not to mention time consuming, and may be best left to a seasoned professional. You can head off any punitive enforcement action the IRS may consider taking by getting in front of your income tax problem with someone who knows how to fix it. There’s no income tax penalty you can’t address without a little professional insight.
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