Failure to file your taxes could result in the IRS charging you with a crime. Robinson & Henry Tax Attorney Lucas Frei recently met with the IRS’ criminal investigation division, and he warns the IRS has increased probes into potential failure to file cases.
It’s important to speak with a tax attorney if you’re being investigated by the IRS. Schedule a time to talk with Lucas.
Here’s what Lucas had to say about the recent uptick in Colorado IRS investigations:
Failure to File vs Failure to Pay
There are a number of ways a taxpayer can get themselves in trouble with the IRS. The two most common are failure to file and failure to pay. Each has their own penalties and consequences.
Failure to file is when a taxpayer does not file their income tax return by the annual tax deadline of April 15th.
Penalties for Failure to File
The failure to file penalty is usually 5% of the unpaid tax amount but cannot exceed 25%. For those who file 60 days late, they face either the minimum penalty of $135 or 100% of the unpaid tax, whichever is smaller.
What if I don’t owe any taxes?
Filing your tax return is required, whether you owe taxes or not. If you earn an income, then you must report it to the federal government. If you do not, then you will still be liable to pay the $135 dollar fine, should you file any later than 60 days.
Failure to pay is when a taxpayer owes money to the IRS and does not make their payment on time. This penalty is less than the failure to file penalty, incurring a .5% charge per month based on the amount you owe. Similarly, the charges cannot exceed 25% of the debt owed.
A taxpayer can be found guilty of both penalty types if they file late and have taxes owed. Usually, the IRS has a kinder outlook on those who file but perhaps cannot immediately pay their tax debt.
Since the failure to file penalty amounts to 10 times the failure to pay penalty, it is recommended you file regardless of your ability to pay – as this will save you money now and give you a better standing with the IRS later.
Robinson & Henry, P.C. | Colorado Tax Attorneys – Call (303) 688-0944 to schedule a convenient time for your free initial consultation.