Friday, March 23, 2012

You Don’t Want to Make the IRS Mad!

April 17th is creeping up on us, and if you are a habitual late filer of your annual income tax form, you are probably well aware of the penalties that you can incur. But if you are (I don’t know how to say this gently)—a tax cheat or a wannabe IRS renegade, or just have been too busy this year to worry about your taxes, you should think twice about missing the deadline.

Here’s why:

1.      Fraudsters, lookout! If fraud is involved, your penalty stacks up to 15% for each month or part of a month that your return is late, up to 75%, maximum.

And if you are under the mistaken impression that paying federal taxes is “voluntary”, just check out the 16th Amendment to the Constitution, which was ratified in 1913, and states, “The Congress shall have the power to lay and collect taxes on income, from whatever source derived”. Consequently, tax evaders may be subject to criminal prosecution for a fraudulent return, refusing to pay, declining to file a return or pay taxes that are due, or making fraud and false statements. And those penalties can mean up to $100,000 in fines and 5 years in jail! The

2.      If you just dawdle and miss the April 17th date (and, hey, we have a whole extra two days this year!), you might be socked with a failure-to-file penalty. That amounts to some 5% of the unpaid taxes for each month or part of a month that you file late. The good news—if you can call it that—is that the IRS won’t charge you more than 25% of the amount of your unpaid tax bite.

3.      For filers who drag their feet more than 60 days past the deadline, your minimum penalty will be at least $135, up to 100% percent of your unpaid tax.

And if you don’t file your return and pay your tax by the due date, you may incur civil penalties. They may also apply to understating your tax or a transaction, filing a refund or credit in error, submitting a frivolous tax, or failure to supply your Social Security number or individual taxpayer identification number.

Moral to this story: File on time!

No comments:

Post a Comment