Meeting tax obligations is a responsibility for both individuals and businesses. However, situations can arise that cause delays or lapses in filing. Missing the deadline can trigger financial and legal repercussions that deeply impact your financial stability. The IRS takes action to enforce compliance when taxes go unfiled.
When taxes are filed after the deadline, the Internal Revenue Service (IRS) may impose late filing penalties. These penalties can range from a percentage of unpaid taxes to a flat fee, and they can significantly increase the amount that you owe. Interest on the unpaid tax liability will continue to accrue until the tax debt is fully paid off. The IRS also imposes a failure to file penalty. This penalty is calculated based on the amount of unpaid taxes you owe and can significantly increase your overall tax liability. The failure to file penalty is separate from the failure to pay penalty, and both can add up quickly, worsening your financial burden. The failure to file penalty can be particularly severe, with the potential to reach up to 25% of your unpaid tax amount.
Failing to file taxes on time can lead to reduced or lost tax refunds. If you are owed a refund and do not file your return within the designated time frame, you may miss out on the opportunity to claim that refund.
Not filing taxes can trigger the IRS’s attention, leading to increased scrutiny and the likelihood of an audit. An audit thoroughly examines your financial records and tax returns to verify accuracy and compliance. Being audited can be time-consuming, stressful, and may result in additional penalties if discrepancies are discovered.
The failure to file taxes on time can lead to legal repercussions. The IRS has the authority to take legal action to collect unpaid taxes, including garnishing wages, seizing assets, and placing liens on property. In severe cases, individuals who intentionally evade taxes may face criminal charges, which can result in fines and even imprisonment.
Fortunately, there are options available for resolving tax debt even if you’ve fallen behind. At CuraDebt Tax, we have a team of tax professionals who are able to find the best tax resolution available to you. Contact us to better understand your tax problems and to choose the best resolution option.
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