It’s After October 15th. What Happens Now?
The extension deadline to file your individual tax return has come and gone. Maybe you got your tax return in on time. Maybe you didn’t. Key question to ask is – what happens now?
Let’s start with the on-time scenarios – your taxes were done and filed by the extension deadline of October 15th.
- If you are due a refund, that’s great! Your work here is done. Your return will be processed and you will be sent your refund per normal IRS procedures. (Hopefully you got direct deposit for your refund, enabling you to get it faster than waiting for a paper check)
- If you owe and you were able to pay your tax bill when you filed, awesome! Your work here is done. Your return and payment will be processed per normal IRS procedures. As a bonus, you may have avoided two penalties from the IRS – Failure to File (by getting your return in on time) and Failure to Pay (by paying what you owe on time) — and interest as well
Those scenarios are if everything goes well. But what happens if you filed on time but were unable to pay your 2019 tax bill? The good news is you avoided the Failure to File penalty (5% of the total tax debt added to the balance due each month (up to 25%)) by getting your return in on time. The bad news is you are going to get hit with the Failure to Pay penalty, which adds an additional 0.5% of the total tax balance due every month (up to 25%) for each month the tax debt goes unpaid. And don’t forget about the interest (between 3% and 9%, calculated every day the tax debt goes unpaid).
What if the triple-whammy scenario hits? You missed the extension deadline, you owe and you can’t pay? Now you’re getting hit with both the Failure to File and the Failure to Pay penalties, plus the interest. The tax bill you couldn’t pay is now getting bigger each month that passes.
Tempting as it may be, the worst thing to do is to do nothing. That growing tax bill won’t just disappear. Even worse would be to just stop filing and paying taxes completely – go off the tax grid. The IRS and state taxing authorities will find you and will stop at nothing to collect what you owe. Wage garnishment, tax liens, bank levies, MVA holds on your license – all are weapons in their collection arsenal.
Yet, all is not lost. If you find yourself in a position with unpaid taxes and mounting penalties and interest, you do have some options. If the amount is reasonable enough, you may be able to take care of the situation yourself. Contact the IRS or your state directly. Inquire about possible payment plans or installment agreements available to pay tax debt. The IRS has an online process for setting up installment agreements for tax debt under $10,000.
But maybe the amount owed is over $10,000. Maybe things have snowballed for a few years and now you have unfiled returns for several years, mounting interest and penalties and owe tens or even hundreds of thousands of dollars. You need the help of a licensed professional.
That’s where we come in.
One Last Thing
Strategic Tax Resolution are your trusted local tax resolution experts. We handle the IRS and State taxing authorities on your behalf, working to negotiate the best possible outcome for you. Strategic Tax Resolution has the experience to customize a resolution plan for your unique tax situation. You’ve got a guy on your side. Contact us today at any of our local area offices, by email or call 888-339-4914. Get Relief!