There are many who believe that they can easily avoid taxes and Internal Revenue Service (IRS) will hardly notice such activities. Many of them have a question does it really make any difference if they fail to pay taxes? It certainly makes a major difference and the worst will happen when the IRS will learn about it.
According to a tax attorney the government considered non-payment of taxes as stealing and you may have to face severe penalties for that. Depending on the status of your tax, penalties will be different
- Failure to file tax
- Avoiding taxes completely
- Penalties for not paying taxes on time
Penalty for not filing tax-return on time
There is no doubt that penalty for late filing will be the simplest one to deal with. IRS affixed 5% penalty per month for late submission, though the maximum penalty that can be tacked is 25%. If you have not filed your tax return for some reason even after that grace period; seek IRS assistance for extending that time period.
In accordance with a tax attorney you will have to fill a form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return. This will offer you another 6 months to work on your tax return. You may file form 2868 for further extension and if you do not ask for extension the 5% penalty will be accumulating.
However, requesting an extension is not the way to defer your tax payment for sometime as you have to settle at least 90% of all your tax dues within a limited span of time or face a monthly penalty of 0.5%.
Penalty for failure to pay taxes
If you fail to settle your tax burden even after several months, the fee increases by 1% per month. If this happens for longer period or repeatedly, the IRS will arbitrate by letting you file for a loan or mortgage your assets. They may resort to more severe methods like they can levy bank loans or garnish wage in order to recover your due taxes. You can learn more about equity loans on this website and get control of your finances.
You may consult with IRS officials for assistance regarding payment of taxes. They may suggest installment plans or Offers in Compromise. However, contact with a tax fraud lawyer if you have to speak with IRS officials. The lawyer will consult with these agents and work out a suitable plan for you.
If all these efforts of IRS fail, they will file for criminal and civil charges against the person. Thus, it is always better to take IRS assistance and work out a suitable payment mode with their assistance when the situation is still under control.