If you fail to file your return and that return has tax that is payable, then you have to suffer from penalties. This punishment can apply to any kind of return but is set aside for taxpayers who intentionally neglect to file. This basically means if you have a very good cause for not being capable to file your return, they will forgive you.
What is it going to Cost Me?
If you fail to file your tax return it will charge you some percentage of the total amount of net tax due per month the return is late. Net tax payable means the amount of tax that is payable on your return minus any payments made on or previous to the return is supposed to be filed.
Fake Failure to File
If your return is found to be a fraudulent return the punishment is much harsher. Each month you do not file your return due to scam you will be charged some fixed percentage as penalty against the net tax due. The utmost penalty that can accumulate overtime is 75% of the total net tax due. This kind of penalty is usual given out to taxpayers that are not filing their return in an effort to avoid paying taxes. One can take help of bookkeepers to complete return process.
When determining whether to apply the fake failure to file penalty against a taxpayer the IRS will look for the following:
1. If the taxpayer cannot give details for not filing their return.
2. If the taxpayer makes up things that do not agree with what the IRS is seeing in the case.
3. If the taxpayer has the past of not filing his return but has the capability to do it.
4. If the taxpayer attempt to conceal assets from the IRS. 5. If the taxpayer pays cash for operating cost either business or personal when it would be normal observe to pay in another method. 6. Has filed in the past on time but this time has selected not to.
Forgiving the Failure to file punishment The IRS will excuse you for filing your return late if you can prove you have sensible cause to do so. Sensible cause does not comprise being lazy and not filing your return as you did not desire to. This is where it gets tricky however; the IRS does not identify what it comprises as reasonable cause. This basically means that every case will be looked at and reviewed by the IRS to decide whether you are entitled to have your penalties waivered.
Some queries the IRS will inquire regarding whether to waive your failure to file penalty comprise:
1. What occurred to cause you not to be able to file your return and when exactly did it occur.
2. What exactly disallowed the taxpayer from filing a return and when was it resolved.
3. What was the taxpayer’s reaction in regard to not being capable to file a return?
4. After the circumstances changed and the taxpayer was capable to file a return, what were their actions? One must pay the income tax on time so that you can keep away from problems. If you be obligated past years tax or owe past years returns. It is significant to get this done sooner than later. The more you wait the more penalties you accumulate.