IRS Reminds Taxpayers to File On Time to Avoid Costly Interest and PenaltiesNews, Offshore Account Update
Posted in on March 18, 2022
With Tax Day less than a month away, the Internal Revenue Service (IRS) is reminding taxpayers that they need to file on time in order to avoid costly interest and penalties. In this article, Maryland tax lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group, discusses the consequences of failing to file on time and what taxpayers should do if they cannot afford to pay what they owe on April 18.
Taxpayers Can Face Failure-to-File Penalties Regardless of How Much They Owe
While most taxpayers know that they can face interest and penalties if they don’t pay their taxes on time, many taxpayers do not realize that the IRS also charges a failure-to-file penalty. As the IRS explains in its March 17, 2022 Tax Tip:
“Taxpayers who owe tax and don't file on time may be charged a failure-to-file penalty. This penalty is usually five percent of the tax owed for each month, or part of a month that the tax return is late, up to 25%.”
Taxpayers can request a filing extension if they won’t be ready to file on April 18—and by doing so they can avoid the failure-to-file penalty. However, “an extension of time to file is not an extension of time to pay.” As a result, even if a taxpayer timely requests a filing extension, the taxpayer must still pay its full tax bill by the April 18, 2022 deadline.
What if you aren’t ready to file because you don’t know how much you owe? This is a common scenario, and it is one that presents challenges for taxpayers. If you won’t know how much you owe by the deadline, you will need to work with an experienced tax professional to make an informed decision about how much to pay the IRS.
What if You Can’t Afford to Pay Your Taxes on April 18, 2022?
Another common challenge taxpayers face is being financially unable to pay the full amount they owe. If you can’t pay your full tax bill on April 18, what should you do?
The IRS says that taxpayers should, “[p]ay as much as possible by the April 18 due date.” While this is generally true, individual and corporate taxpayers alike need to be very careful when submitting a partial payment to the IRS. Paying less than your returns say you owe will almost certainly trigger IRS scrutiny, so it is important to have a plan—and begin executing your plan—before you file.
In terms of the plan you should pursue, there are several potential options. Depending on your circumstances, a Maryland tax lawyer may recommend requesting a payment plan, proposing an offer in compromise (OIC) or pursuing another alternative.
Request a Confidential Consultation with Maryland Tax Lawyer Kevin E. Thorn
If you need to know more about the options that are available for avoiding unnecessary IRS interest and penalties, we encourage you to schedule an appointment. Please call 240-235-5096, email firstname.lastname@example.org or contact us online to request a confidential consultation with Maryland tax lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group.Share This Post