It is Never to Late to File Your Tax Returns
In most instances, the problems faced by non-filers can be resolved successfully if the taxpayer voluntarily addresses the problem. On the other hand, the continuing failure of a taxpayer to voluntarily comply with tax return filing can result in severe consequences. In some cases, a taxpayer may even suffer criminal tax prosecution for failure to file returns.
Ramifications of Not Filing:
- Penalties and Interest will be assessed and will increase the amount of tax due. There is a maximum 25% late filing penalty that can be applied to the tax.
- The IRS will file a substitute return for you, but this return is based only on information the IRS has from other sources. Thus, if the IRS prepares this substitute return, it will not include any exemptions or expenses you may be entitled to claim and may overstate your real tax liability.
- Once the tax is assessed, the IRS will start the collection process, which can include garnishing your wages, placing a levy on your bank accounts, or filing a federal tax lien against your property.
- Even if the IRS has already filed a substitute return, it still makes sense for you to file your own return to make sure you take advantage of all the exemptions, credits, and deductions you are allowed. The IRS will generally adjust your account to reflect the correct figures.
Difficulties with Filing for Multiple Years:
Filing for multiple years can be challenging for numerous reasons.
- You must determine if you actually needed to file a tax return for the year in question;
- Tax forms change every year;
- Tax laws also change every year; and
- You may be missing some or all of your records that will be needed to prepare those returns.