The IRS extended the deadline for filing and paying 2019 taxes from April 15 to October 15 of this year. If you applied for an extension, your taxes were due on October 20 which has also passed. If you have procrastinated until now, you are subject to substantial penalties and interest added to your original tax liability. You may also be losing sleep worrying about the legal and financial consequences of failure to file.
Tax Crisis Institute is here to assist you. We have trained, experienced experts to help with your tax difficulties. Going it alone is not necessary and may not be your best course of action. With all the other concerns during this unusual year let us assist you through the process.
What Happens If I Am Late Filing My Taxes?
If you do not owe taxes, there is no penalty for filing late or failure to file. If you fail to file and are due a refund, you will be unable to collect the refund after three years. However if you owe past taxes and have failed to file, you can be facing legal action, substantial penalties and interest and the difficulties of an IRS collection process.
Penalties and interest are greater for failure to file than for failure to pay. Obviously, filing and paying your taxes on time is your best course of action. Penalties for late filing (or failure to file) can be 5% of the unpaid taxes per month, increasing incrementally up to 25% of the unpaid taxes.
The penalty for late payment of taxes, if you filed on time, can be as low as 0.5% and also has a cap of 25% of the tax liability. Interest will continue to accrue against the unpaid taxes and penalties until full payment is made. Willful failure to not file a timely tax return can result in prosecution for a misdemeanor offense.
The statute of limitations for willful failure to file is six years. If you file but don’t pay, the IRS usually has 10 years to collect. If you fail to file taxes, the IRS may file a return for you, usually resulting in a higher tax liability than if you had filed on your own. This is due to the fact you do not have the advantage of claiming deductions. If you fail to file taxes, the IRS will have no time limit on when they can collect past due taxes. Obviously, choosing to file even if you cannot afford to pay is the best decision. If you have passed the deadline for filing your tax return, it would be best to consult with a qualified tax specialist before the IRS begins collection proceedings.
What Is The Process For Collection?
If you fail to file your tax return, the IRS has no time limit on when they can begin the collection process. You will be notified by letter that you have an unfiled tax return and unpaid taxes (plus penalties and interest which have accrued from the original due date). The letter is the beginning of the collection process and will demand payment of the full balance owed subject to daily interest and monthly penalties.
These can cause your bill to increase substantially over time. It is best to file and pay as much of your tax liability as soon as possible. You can then negotiate a payment plan for the balance. If you have unpaid taxes and are unable to pay, it may be possible to defer payment and the amount could possibly be negotiated. It may also be possible to negotiate a payment plan with the IRS. Consulting with a specialist is the best way to resolve your tax issue and protect your assets from being seized by the IRS.
What Assets Will The IRS Have Access To?
If you fail to pay your taxes, the IRS will have access to anything you own not considered necessary to the survival and shelter of you and your family. Items the IRS can seize to resolve tax debt include:
- Recreational vehicles such as RVs, boats, cars, motorcycles
- Vacation and second homes
- Fine jewelry such as gold, silver and precious stones
- Retirement accounts, savings accounts, regular bank accounts
- Life insurance policies
- Government payments including Social Security, unemployment, public assistance payments…
The IRS has the authority to garnish your wages without going to court and can collect at a higher rate than other debtors. The IRS can also seize jointly owned property even if the other party owes no taxes. Should you file in the future the IRS can retain any tax refund you might be entitled to.
If your tax debt is $5000 or less the IRS will often attempt to collect in less severe ways. If you have unpaid taxes due with penalties and interest, you might want to contact the Tax Crisis Institute to negotiate the process and help protect your assets.
How Can I Protect My Assets?
Obviously the most effective way to protect your assets from the IRS is to file your tax return and pay any owed taxes on or before the tax deadline. If you have already received notice from the IRS of unfiled or unpaid taxes and it is not possible for you to pay at this time, you can find your liability online at IRS.gov. It is critical that you get in touch with the IRS quickly. There are circumstances in which the IRS will work with you.
Should the IRS proceed with collection, there are items protected from seizure such as:
- Your primary residence
- Tools you need for work valued at less than $3520
- Furniture valued at less than $7720
If public assistance, unemployment or Social Security are your only source of income, the IRS will not generally withhold those. If you have unfiled or unpaid taxes and wish to protect your assets, immediate action is needed on your part. You should consider contacting a tax specialist to guide you through the process.
Tax Crisis Institute has been a tax relief leader for over 30 years. When you work with the Tax Crisis Institute, we’ll make sure you don’t pay anything more than you owe!
Call Tax Crisis Institute today for a FREE consultation!