Actions the IRS Can Take if You Don't File Your Taxes
Taxes can be complicated at times. Perhaps you have questions about the deductions you can take, or maybe you are concerned about the amount you owe. Whatever the case, you should always file your taxes. If the IRS discovers that you did not file your taxes, they can take a number of different actions against you – and none of them are good. The potential consequences for not filing your tax return include:
Substitute for Return Once the IRS notices your taxes are not filed, they will complete your tax return for you. At first, this might not seem like a bad idea – unfortunately, there is a catch. When the Substitute for Return is issued, additional exemptions or expenses you are rightfully entitled to may be excluded. Additionally, your real tax liability might be overstated, so you could be losing even more money than had you filed your return in the first place.
Penalties and Interest Failing to file taxes on time can also result in a number of penalties and incurred interest. The failure-to-file penalty, for example, results in a monthly late fee equal to 5% of your total balance due. After five months, this percentage will increase to 25%. You may also be charged interest based on the total of your past-due tax balance. The current interest rate is 3%.
Jail Time Although most people who do not file a tax return do not go to jail, the IRS can suggest criminal prosecution for individuals who fail to file taxes. Notorious gangster Al Capone and actor Wesley Snipes are just a few of the high-profile celebrities who served jail time for not filing a tax return, but it can happen to anyone, so be sure to file your taxes truthfully and on-time to avoid a potential criminal prosecution.
The best way to avoid trouble with the IRS is to have your taxes filed at The San Diego Tax Pro. We help individuals and businesses in the San Diego area prepare and file taxes. Visit our website or call (888) 690-9245 to learn more about our tax preparation services.
Disclaimer:
(1) nothing contained in this website was intended or written to be used, can be used by any taxpayer, or may be relied upon or used by any taxpayer for the purposes of avoiding penalties that may be imposed on the taxpayer under the Internal Revenue Code of 1986, as amended; (2) any written statement contained on this website related to any federal tax transaction or matter may not be used by any person to support the promotion or marketing or to recommend any federal tax transaction or matter; and (3) any taxpayer should seek advice based on the taxpayer's particular circumstances from an independent tax advisor with respect to any federal tax transaction or matter contained in this website. No one, without our express written permission, may use any part of this website in promoting, marketing or recommending an arrangement relating to any federal tax matter to one or more taxpayers.
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