Someone once said that death and taxes may be certain, but we don’t have to die every year. We do have to file taxes every year though, so what happens if you file your tax return late? Or even worse, what if you don’t file your tax return at all?
If you don’t owe the IRS any money, you may be just fine. But it’s still a good idea to file your tax return, particularly if you are due a refund. The IRS won’t just send your refund. You have to file your taxes to claim it!
If you do owe the IRS money, then you might want to do three things: file your extension, make estimated payment, then file your actual return before October 17, 2016 (if your request for extension was approved). Remember, your tax payments are due on the actual tax deadline so if you missed the deadline to file, you should send in a payment for the estimated amount of taxes you owe, otherwise you may owe penalties.
But what happens if you missed the filing deadline and you haven’t filed for an extension? Chances are you will receive a communication from IRS advising you of owed interest and penalties. Failure to pay and failure to file penalties are just two types of penalties automatically assessed by the IRS. You can also owe penalties for underpaying your taxes. These can be assessed at different levels, from a small fine to criminal charges, depending on whether or not the IRS determines there was criminal intent involved. Some of the possible charges include criminal or civil fraud, negligence, or frivolous return. Penalties for these can range from fines to even jail time. If you don’t pay your tax bill, the IRS can also file a Notice of Federal Tax Lien, which can damage your credit score and cause countless other problems.
In summary, you do not want to ignore your obligation to the IRS because the consequences can be highly unpleasant – just ask Martha Steward, Wesley Snipes, and Willie Nelson, to name just a few celebrities convicted of tax evasion.