| Here is what can happen if you do not file your tax | | | | that person to communicate with the IRS directly on |
| return... | | | | your behalf. |
| Thousands of people each year fall behind in filing | | | | In the event that you owe the IRS money and you |
| their tax returns. The largest reasons for not filing are | | | | have made no effort to arrange for payment the IRS |
| fear of not knowing how to file and the thought of not | | | | may take action through issuing a tax levy (such as |
| being able to pay the balance due. Even if you are | | | | garnishing your wages) or serving you with a federal |
| unable to pay you should file your return to avoid | | | | tax lien. A garnishment of wages, or wage levy, takes |
| future penalties for not filing. Penalties for not filing can | | | | place by notifying your employer of your debt and |
| reach up to 25% of the amount due. If you are due a | | | | forcing them to send a portion of your wages to the |
| refund from the IRS there is no penalty for not filing. | | | | IRS. Depending on your debt and other factors such |
| However, you should file as soon as possible to avoid | | | | as marital status and number of dependents; 30% to |
| losing your refund. After three years from the tax | | | | 70% of your check may be withheld. Wage levies |
| return due date you will not be eligible to collect a | | | | which are often a surprise can make living very difficult |
| refund or claim tax credits on your return. | | | | for someone by not enabling them to pay their bills. In |
| To help those who can not afford to pay the balance | | | | order to avoid dealing with a wage levy contact the |
| due by April 15th the IRS does offer installment | | | | IRS or get a professional to assist you as soon as you |
| agreements to pay off your debt. The downside to | | | | receive notice that they are going to levy your |
| installment agreements is that you will continue to pay | | | | paycheck or bank account. A levy can also take place |
| penalties and interest because you did not pay your | | | | in the form of personal property (your house, car, boat) |
| yearly taxes in full. If your debt to the IRS is so large | | | | or other property that is yours but held by another |
| that an installment agreement will not help and there is | | | | entity (your social security, dividends, or rental income). |
| reason to believe that paying would place you in a | | | | As for tax liens, the IRS often file them to protect their |
| financial hardship there is the option to file an offer in | | | | interest. If you have a tax lien filed against you it will |
| compromise. In the case that you believe you may | | | | destroy your credit. For all debts besides secured |
| qualify to file an offer in compromise you should | | | | mortgages, the IRS becomes the next lien holder and |
| consult with an experienced professional first. | | | | they will not release the lien until you have fully paid off |
| To help ensure that you do not end up with a large tax | | | | the debt or an offer in compromise case has been |
| bill at the end of the year make sure you are | | | | settled. Although most cases with the IRS are handled |
| withholding enough tax from your regular paycheck or | | | | in civil court the consequences for not filing and |
| making estimated tax payments throughout the year if | | | | complying with IRS laws can be brutal. It can be a |
| you are self employed. Events such as an increase in | | | | crime to willfully not file a return. To avoid being |
| earnings or change in marital status may call for the | | | | investigated you have to make an effort to file your |
| need to change your withholding amount. As long as | | | | return or make arrangements to begin the process of |
| the taxpayer has paid the same amount of taxes | | | | filing (such as hiring a tax professional) before you |
| from the prior year or they have paid 90% of the | | | | receive a letter stating that you are under criminal |
| current year’s tax, whichever is smaller, they will | | | | investigation. In 2006 the IRS obtained indictments in |
| not be penalized. | | | | over half of the non-filer cases it criminally investigated. |
| After not filing one year it seems the chances of filing | | | | Average jail time given to those that were convicted |
| the next year go from slim to none. If you are years | | | | was 40 months. You must show that you are making |
| behind in filing you should consult with a professional to | | | | an effort to comply with the law in order to stay away |
| help you file all your returns correctly. The sooner you | | | | from serving jail time and especially to avoid the loss |
| file; the better. Penalties and interest will continue to | | | | of hard earned property. Remember that going up |
| accrue until you decide to do something about them. | | | | against the IRS alone is like getting in the lions den |
| Finding someone who is knowledgeable in tax law and | | | | without a weapon. Hiring an experienced professional |
| IRS procedures will help take the stress off of your | | | | to guide you is the most beneficial option you can take. |
| shoulders. You can sign a power of attorney to allow | | | | |