It’s not uncommon for people to
experience delays when filing their tax returns. Are you running late and
fretting about the consequences? There are penalties for late filing and late
payment such as interest. Don’t worry though.
It’s not the end of the world to file your taxes late. A tax lawyer can help
you deal with this situation.
The IRS penalizes taxpayers for
late filing and late payment. On top of
these two fines, the IRS also charges interest for taxes that have not been
paid. If it is painful for you to part
with good money because of late payments, get your act together and meet the
IRS deadlines. If you are already late and there is nothing to be done about
that, what you can do is look for a competent tax lawyer.
A tax lawyer can help you argue
“reasonable cause” for delay. He can also advise you on easy payment methods,
which the IRS will be amenable to for as long as you can show proof of
financial difficulty. There is a ton of
paperwork involved so having a professional at your side is best. Just refrain
from excuses like “my dog ate it.” We’ve
tried it, it doesn’t work.
Late Filing Penalty
If you fail to file your tax
return by the due date, expect to be fined 5% of the net amount of tax due for
every month that the tax return is late. It is calculated from the deadline to
the time that the return is actually filed.
The maximum penalty is 25% of your tax bill, so you cannot be fined more
than that.
A good option for those who are
running late is the submission of Form 4868, which is the application for
extension. This option is for those
who need more time to prepare their federal tax return. It is important to
remember that Form 4868 does not extend the time to pay.
Late Payment Penalty
If you fail to pay your taxes
by the due date, you will be fined 0.5% of the portion of your tax bill that is
unpaid. This is a monthly fine so your penalty increases every month that you
don’t settle your tax bill.
The services of a good tax
lawyer come in handy at this time. There are instances when the IRS waives or
abates penalty if there is reasonable cause for the delay. You may also submit an offer in compromise.
The IRS won’t insist on collecting taxes from you if doing so will create
financial hardship, i.e., put you on the streets begging for food.
Interest
In addition to the penalty, you
will also pay interest for each day that the payment is late. Interest rates
change because they are set by the IRS quarterly. According to the IRS website, the interest
rate for September 2013 is 3% per year. It is calculated based on the amount
that remains unpaid.
One important thing about taxes
is that even if you have difficulty paying them, you should still file your tax
return on time. A good tax attorney can help you explore payment options and
even help you request abatement The IRS
will work with you and won’t bleed you dry. But you should file your tax return
on time.
Question:
Do I always need legal representation
when dealing with the IRS?
Answer:
No, you may request abatement
and make offers in compromise on your own. A tax lawyer has the experience and
the expertise, so their professional services improve your chances of success.
Comment:
The article should have also
included what constitutes “reasonable cause.”
As far as I know, death
or grave illness by the taxpayer or a close kin is an acceptable reason. Are there others valid reasons that the IRS
accepts?
If an IRS employee or a tax
practitioner gives you wrong information, this situation is also considered by
the IRS as reasonable cause.
No comments:
Post a Comment