Some people think that they can neglect
tax and IRS will not notice it as there are so many taxpayers. But this
is not true. IRS monitors the transactions made by different persons and
organizations. So, if you don't a tax return the IRS will find you and
will charge you with penalties and interest. So, it is better to pay
your tax at the right time to avoid penalties. Different types of
penalties are imposed on a person depending on the situation and
charges. IRS considers non-payment of tax as an act of stealing money
from the government.Three types
of penalties imposed by the IRS include penalties for late tax filing,
penalties for not filing your taxes at all and penalties for non-payment
of your taxes. The penalty will be less if it is due to late filing of
taxes. In this case, you will be charged with a 5% extra monthly
payment. But if you fail to pay this also then the percentage will
increase. So, it is better to file the taxes as early as possible. In
case you have got some genuine excuses then you can ask for some
extension from the IRS. But the IRS must feel that the reason is good.
For that, you must provide some supplementary evidence like documentary
proofs. In order to apply for extension, you must fill the Form 4868. If
you want more time then you must use the form 2688. Failure to file a
request will result in a 5% penalty.
If you make a request, it does not mean
that they are granting you extra time for paying the taxes. About 90% of
the total tax you owe to the IRS must be settled. Otherwise you will
have to pay a 0.5% penalty. If you do not have the full amount to be
paid then you can pay a part of the tax. In this way the amount to be
paid as the penalty can be reduced. If you delay the payment then you
will have to pay more money as tax. So, pay the remaining amount as soon
as possible. If you did not pay the tax for a long time and don't take
actions in response to the IRS notices and threats, then the IRS will be
forced to take the next step like levying bank accounts, property
attachment etc. If the IRS finds that you have cheated them then they
may take stronger actions like imprisonment. If you have got any tax
problems then contact IRS immediately and make an agreement for paying
the tax. Different payment options are available to the taxpayer like
installment plans, Offer in Compromise and much more.
Just know that even if you cannot pay
the taxes owed for your tax return, it is still best for you to go ahead
and file the return anyways because the consequences for not paying will
be much less than not filing. If you are having trouble paying, you can
always use the help of a tax professional and they can help you settle
for less or setup a manageable payment plan for you.
