People have to pay income taxes when they work or have other sources of income, such as rental properties or investments. Those with regular income typically have to file income tax returns every year with the Internal Revenue Service (IRS).
An income tax return helps reconcile any estimated payments with the total amount of taxes due based on an individual’s income and certain other factors. The due date for income tax payments and returns is April 15th most years, unless that date falls on a weekend. People have to submit their returns electronically or have them in the mail no later than April 15th.
Sometimes, challenging personal circumstances might lead to people forgetting to prepare an income tax return in time. What happens when people do not file their annual income tax return by the due date in April?
Taxpayers can request an extension
The IRS is somewhat flexible so long as people communicate effectively about their circumstances. Typically, taxpayers have the option of requesting an extension on their return that can protect them from major consequences until October 15th. Extension requests are also due by April 15th.
However, there are inevitably financial consequences associated with a late income tax return if there are taxes due from the filer. Specifically, the IRS begins calculating interest and penalties on April 15 or the next business day.
Therefore, those delaying their income tax return may still need to submit estimated income tax payments to the IRS to avoid penalties and interest. In cases where people completely fail to file their tax returns and do not make payments as they should, they may be at risk of tax controversies.
They could face audit requests in some cases. Other times, the IRS might accuse them of tax evasion if they have a large balance due and do not file a return as necessary. Those trying to correct an income tax issue, pay an income tax debt or evaluate their options during an income tax controversy may need help.
Reviewing – with a skilled legal team – the circumstances that led to a delay in filing and paying taxes can help people limit the legal and financial exposure they have. The support of an attorney familiar with tax law can make a major difference for those who have made mistakes on their tax returns, forgotten to file a tax return or received concerning communication from the IRS.