Non-filing is considered a crime if you owe back taxes. Up to a year in jail and a $25,000 fine for each year of non-filing is a stiff penalty you open yourself up to by not filing. The penalty is higher if it is deemed you are involved in a scheme to evade taxes, up to 5 years in jail and a $100,000 for each year of non-filing.
A lesser and more common punishment would be for the IRS to prepare your tax return for you. To do this the IRS will give you the lowest of exemptions and deductions while raising your income by using tables furnished by the Bureau of Labor Statistics. Obviously this will result in a much higher tax debt than you would owe if you had someone prepare the returns for you.
The Internal Revenue Manual states:
Interest, compounded daily, is charged on any unpaid tax from the due date of the return until the date of payment. The interest rate is the federal short-term rate plus 3 percent. If you did not file on time and owe tax, you may owe an additional penalty for failure to file unless you can show reasonable cause. The combined penalty is 5 percent (4.5% late filing, 0.5% late payment) for each month, or part of a month, that your return was late, up to 25%. The late filing penalty applies to the net amount due, which is the tax shown on your return and any additional tax found to be due, as reduced by any credits for withholding and estimated tax and any timely payments made with the return. After five months, if you still have not paid, the 0.5% failure-to-pay penalty continues to run, up to 25%, until the tax is paid. Thus, the total penalty for failure to file and pay can be 47.5% (22.5% late filing, 25% late payment) of the tax owed. Also, if your return was over 60 days late, the minimum failure-to-file penalty is the smaller of $100 or 100% of the tax required to be shown on the return.
Contact Patriot Tax resolution Company today and we will have a licensed tax professional go into more depth about your particular situation and we can advise you on what programs you qualify for and send you off in the right direction.
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