Why You Should File Past Due Tax Returns, Now!

Taxpayers that have failed to file tax returns for some extended period of time should strongly consider doing so immediately. Even if taxpayers have filed for an extension, time is of the essence to avoid costly penalties as the IRS assesses failure to file (FTF) and failure to pay (FTP) penalties in this situation.

The failure to file penalty is assessed at a rate of 5% per month or partial month up to a maximum rate of 25%. The failure to pay penalty is assessed at a rate of 0.5% per month or partial month up to a maximum rate of 25%. If the IRS assesses both the FTF and FTP penalties, the FTF penalty is reduced by the amount of the FTP penalty.

If a taxpayer filed an extension by the April 18, 2016, tax year deadline, while it provides six additional months to file a tax return, it does not provide an extension of time to pay taxes. If a taxpayer expects to owe tax, he or she must estimate the amount due and pay it with Form 4868. Thus, the clock starts to tick on any penalties and interest for taxes unpaid by the deadline.

If a taxpayer expects a refund, then there is no penalty for failing to file a tax return by the deadline, even if an extension is not requested. The reason? The penalty for the delinquent filing of a tax return late is a percentage of the tax owed for that particular year’s return. Just the same, there are important reasons to file a return as soon as possible.

The best reason for filing a return is the following: if expecting a refund, no refund will be provided until the return is filed. Thus, to receive a refund as soon as possible, file as soon as possible. Second, the statute of limitations for the audit of a return does not commence until the return is actually filed. Finally, some Tax Code elections must be made on a timely basis by a certain deadline, which may be the due date of the return.

For questions or concerns about unfiled tax returns, you should contact the experienced and reliable tax professionals at the Thorgood Law Firm www.thorgoodlaww.com . For a FREE consultation call 212-490-0704.Why You Should File Past Due Tax Returns, Now!

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