Tax filing obligations can feel stressful, especially if the deadline is coming up and you are unsure how much you might owe. Many individuals and businesses may be tempted to delay or neglect filing returns when their financial circumstances are uncertain. Although it may seem like putting off a difficult task, failing to file returns on time can bring disruptive outcomes. From costly penalties and accrued interest to criminal liability and professional discipline, there are many reasons to pay close attention to filing rules and deadlines.
If you are dealing with late or unfiled returns, the tax attorneys at Thorgood Law Firm in New York are available to speak with you. Your initial consultation is free, and we will match you with an attorney who has handled these issues for years.
Why is Filing Income Tax Returns in a Timely Manner So Important?
When a return is not filed by its due date, federal and state taxing authorities can impose a range of penalties. In New York, authorities use a variety of penalty rules to encourage taxpayers to file and pay without delay. Penalties often start accruing immediately once the filing deadline has passed, so even a short delay can lead to unnecessary costs. On top of that, interest charges are likely to accumulate.
Preservation of Legal Rights
Filing on time also preserves your right to dispute or appeal any assessments the government might make. For example, if you fail to file, New York Tax Law § 681 authorizes the tax commission to prepare an estimate of your income and issue a notice of deficiency against you. Once that notice is issued, you have limited time to contest it. By neglecting to file your own returns, you allow the authorities to guess your income and create a calculation that is likely not in your favor.
Prevention of Professional Consequences
Certain licensed professionals can face discipline if they do not comply with tax filing obligations. For instance, attorneys in New York have been suspended from legal practice for failing to file returns over multiple years. If you work in a field where you must maintain a professional license, timely compliance with tax laws is key.
Peace of Mind
Another key reason to file on time is the sense of relief it brings. Facing unknown tax debts and the ongoing worry that your situation might escalate can take an emotional toll. Once returns are properly submitted, you have a much clearer picture of your obligations, and you can then address any outstanding balances through available programs.
What Are the Penalties for Filing Late or Not Filing at All in New York?
New York imposes a variety of penalties and interest charges when taxpayers fail to file or pay on schedule. These rules can become complicated, but a few key elements of the law stand out:
Penalty Under § 685
New York Tax Law § 685 spells out the financial penalty for failing to file by the prescribed date. If your return is late, the penalty is 5% of the tax due for the first month. It increases by an additional 5% for each month the return remains unfiled, up to a maximum of 25%. Beyond the percentage-based penalty, if the return is more than 60 days late, the penalty becomes the lesser of $100 or 100% of the unpaid tax.
To illustrate, if you owe $2,000 and you file three months late, you can expect an escalating penalty based on that 5% addition each month. By the time you file, the penalty may have already reached 15% of the total tax due (5% per month for three months).
Interest Charges
On top of penalties, you will usually owe interest on any unpaid tax balance. The longer you wait, the more interest accrues. This can sharply raise the total amount you end up owing to the government.
Criminal Penalties for Repeated Failure to File
Under New York Tax Law § 1808, if you fail to file a return for three consecutive years and there are unpaid liabilities for each of those years, this can rise to a Class E felony. This provision demonstrates how seriously the state views repeated noncompliance.
Potential Felony Prosecution for Other Tax-Related Offenses
In some situations, failing to file may be tied to other offenses, such as filing fraudulent information or intentionally evading taxes. This can move a taxpayer’s liability from a civil matter to a criminal matter. Willful intent to avoid filing or paying taxes can lead to misdemeanor or felony charges, depending on how the authorities view your actions and the amount of unpaid tax.
Could I Face Criminal Charges Even If I Do Not Intend to Violate the Law?
It is possible to face criminal investigations or charges when the government concludes that your failure to file or pay is intentional. Authorities understand that everyone makes mistakes. For this reason, they will look for any signs that you acted deliberately to dodge your tax obligations.
- Willful Failure to File: Under certain provisions, such as New York Tax Law § 1802 (Criminal tax fraud in the fifth degree), authorities can file charges if they believe that you intentionally failed to file your tax return. Even a single tax year can lead to criminal charges if there is enough evidence to show your actions were deliberate and not due to oversight or misunderstanding.
- Escalation to More Serious Charges: If the authorities find that the underreporting or non-reporting of tax is very large, or you engaged in falsification of income and deductions, more severe charges can be possible.
It is important to remember that an honest mistake or short delay in filing is often treated differently than repeated failures over multiple years. The government typically looks at patterns of behavior, the size of the tax liability, and whether you tried to correct your filing status.
If You Have Unfiled Tax Returns, Do Not Hesitate to Reach Out to Our NY Tax Attorneys
Timely filing protects you from penalties, interest, and the possibility of criminal prosecutions. It also preserves your ability to challenge inaccurate assessments. In New York, the laws are clear: a pattern of missed filings can lead to felony charges under Tax Law § 1808 and significant late-filing penalties under § 685.
Even if you have multiple years of missing returns, the path to resolving them is still open. The steps may include gathering documents, filing accurate returns, negotiating payment plans, or seeking penalty abatement. By taking these actions sooner rather than later, you can minimize legal and financial damage.
The attorneys at Thorgood Law Firm are ready to offer guidance that reflects many years of practice in this area of law. We invite you to contact our office, located at 100 Park Avenue, 16th Floor, New York, NY 10017, to discuss the details of your situation. There is no cost for the initial consultation, and we stand prepared to help you find a more secure financial footing.
If you have unfiled tax returns or if you are worried about the potential penalties, do not hesitate to reach out. Take action now to avoid further problems. The steps you take today can protect your finances, your personal well-being, and your professional future.
