Filing Taxes Late
If you can’t file your tax return on time you should request an automatic four-month tax extension (often referred to as Late Tax form) by filling Form 4868 by April 15th. A second extension to file, Form 2688 may be filed by August 15th. You must state good reason, as the Additional Extension is not automatic and you may be charged a late filing fee.
Tax Extension Penalties
Tax extensions do not extend your deadline to pay the taxes. You must file and pay your taxes by April 15, or by the end of the extension period, or you will incur a “Failure to file penalty” of 25% in addition to the “failure to pay” late fees and penalties You are required to pay 90% of your previous year taxes when filing your extension; however, to minimize penalties, file your return even if you can’t make full payment, as making late IRS payments will incur late fees.
There is no penalty for failure to file if you are due a refund. You cannot obtain a refund without filing a tax return, and waiting too long may result in losing the refund altogether.
Substitute Tax Returns
Failure to file tax returns will result in the IRS filing “substitute returns” not including additional exemptions and expenses you may be entitled to claim. Once the IRS assesses the tax it will assess more late fees, and will commence the collection process, which may include garnishing wages and bank accounts, or levying property. Making late IRS payments may not stop the process.
Statute of Limitations on Late Tax Filing
One critical reason for filing timing returns is that the statue of limitations for the IRS to assess and collect any outstanding tax balance does not start until a return has been filed. Most importantly, there is no statute of limitations on substitute returns.
Late Tax Filing Accoutant Help
The IRS’s filing and collection laws are very complex, and have significant implications and adverse results. It is critical to seek the advice of an experienced late tax filing accounting professional to minimize penalties.