The Consequences of Late Tax Payment – Laid Out

Late tax payments can incur many consequences in the United States. The Internal Service
Revenue (IRS) can punish taxpayers in many different ways if they do not pay income taxes on time. Tax relief options are also Some notable ways is the high incurred interest on the unpaid taxes and various other penalties for defaulting. If tax debt continues to increase, the IRS will send a scarlet letter in the form of a Notice of Deficiency. This 90-day letter of notification details any alleged tax issues and other penalties and interest. Besides the more prominent consequences, below is a list of lesser-known effects
of defaulted tax payments.
Here are 7 points to note about penalties and consequences:
● A failure-to-pay penalty may apply for not paying all of the taxes owed by the tax filing deadline
(April 15).
● Failure to file is a heavier penalty, even if the taxpayer is unable to pay the entirety of the taxes,
interest, and penalties will be reduced by paying as much as they can. There are other IRS
assistance options such as getting a loan or making an installment agreement to make payments.
● Penalties for filing late is 5% of unpaid taxes for each month or part of the month the return is late and it starts accruing the day after the tax filing date and will not exceed 25% of the unpaid taxes.
● Reimbursement will be delayed in addition to incurring the penalty and the taxpayer gives up
the ability to save or invest the money at a higher return
● The IRS has a right to file a “substitute for return” on behalf of the filer and it does not take the filers’ best interests in mind. This return is not taking into account any tax credits and deductions, meaning that the taxpayer will likely have to pay higher taxes.
● IRS tax debt means forfeiture of tax refunds, and it will be considered a generous “donation”
● If after multiple notices the taxpayer refuses to comply, the IRS can send a representative to collect payment if they owe $25,000 or more. Continuing to evade tax collection will let to asset seizure and may lead to jail time.
If faced with any of the more severe penalties it may be helpful to consult with tax relief services. The professionals will be more able to advise on the assistance process and come up with a better way to restructure payments. Whatever the reason for late tax payments, it can still be worked through with the proper guidance.