By this time most of you must have filed your 2011 tax returns already, as the filing deadline on April 17 had long passed. But if you are among those who failed to file their tax returns, including those with unfiled tax returns on previous years, the IRS may go after you and impose penalties. In extreme cases, IRS may even initiate an investigation for possible filing of criminal charges.
In my years of experience in practice, most people fail to file tax returns not because of an intention to evade paying taxes, but due to ignorance, an honest mistake, oversight, taxpayer not having enough money to pay taxes or plain procrastination.
For example, I once had a client whose tax returns were regularly prepared and filed by her husband under a “married, filing jointly” status. But after her husband died, my client who had been accustomed to her husband taking care of their tax returns, did not file her tax returns, year after year, until IRS started noticing and began imposing penalties for not filing. My client was simply intimidated by the task of filing her tax returns as her deceased husband took care of everything before.
Every income earning individual is required by law to pay taxes as part of supporting the government in raising revenue. The government determines how much each person must pay in taxes through the income tax return (IRS Form 1040) that must be filed every year with the IRS.
If you don’t file your tax return, you will be liable for penalty and interest on taxes due. Interest may also be imposed on the penalty. In other words, you will end up paying more if you do not file your tax return and do not pay the taxes due on it.
Although the IRS relies primarily on your filed tax return to determine how much taxes you owe, the IRS has other sources to ascertain your income, such as reports submitted to the IRS by employers or other entities which are required by law to provide income information. The IRS will find out how much money or income you made even if you did not file your tax return.
Aside from penalties and interests, you may miss out on important benefits you would otherwise be entitled by filing a tax return. If you don’t file your tax return, the IRS may prepare a return for you known as a substitute for return (SFR). If this happens, chances are the IRS will not include all deductions and exemptions to which you may be entitled which will result in the highest tax assessment possible. Also, if you fail to file your tax return, you may lose any tax refund due to you.
There are many more benefits – and disadvantages – by not filing a tax return. So, if you did not file your 2011 tax return and/or you have years of unfiled tax returns, it is still not too late for you to correct what would otherwise be a costly omission. Even if you owe taxes that have accumulated for years, do not despair. A tax professional can help you explore legally available options and settle you tax liabilities.
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Edgardo M. Lopez is an attorney licensed to practice in the Internal Revenue Service and the United States Tax Court. He has been an attorney for 25 years and he is a member of the American Society of Tax Problem Solvers. His IRS practice is throughout the United States and he has offices in the entire State of California (Los Angeles, San Francisco, and San Diego). His office has an A+ rating with the Better Business Bureau. Toll Free: (855) 829 4771; (888) 970 3939, E-mail: [email protected], Website: TaxReleaseInc.com