Most people are aware of the importance of filing income tax returns on time. They know that this will keep their financial health in good shape. They also know that failing to file taxes on time has serious consequences. These are excellent reasons to hire a tax preparation service. However, some people might erroneously assume that not filing their taxes will help them avoid the problems associated with tax liabilities. The truth is that failure of tax file returns may have more serious implications. Ignoring your tax obligations will land you in serious trouble with the Internal Revenue Service (IRS).
Not Filing Is the Same as Not Paying
You are in danger of criminal penalties, fines, and imprisonment if you fail to file your taxes. The IRS does not take lightly to not filing, and it is not a voluntary process. Anyone with a certain amount of income every year is legally expected to pay tax. This is a necessary condition that is stipulated in the internal revenue code. You will be penalized if you do not file returns and you will also be penalized if you do not pay taxes. What if you have no money to pay taxes? Even then, you are not exempted from filing returns because you do not have money.
Choices You Make Will Have Consequences
When you fail to file your returns or do so after the given time, this will attract a late filing penalty. You should file your returns before the deadline expires or before the extension deadline expires. If you do miss it, you will get reminders from the IRS. It helps to consult a tax preparation service to help you make the right decisions. When the IRS does not get a response from you, they will file what is known as a ‘substitute return’ on your behalf. This will calculate the taxes you owe based on your taxable income as well as other relevant penalties. If you are self-employed, the payments you revive will be used to compute the substitute for return.
Failing to File or Pay Can Get You in Jail
A substitute for return will not take into account any tax credits and deductions. You will end up paying more on your taxes. When you get a substitute for return notifications, you can still make file returns, claim deductions and expenses, and the IRS will make suitable changes. Should you continue to ignore the IRS, you will get a visit from an IRS representative for purposes of collection of payment. This generally happens when you owe more than $25,000. If you are still adamant about not paying, the courts will order the wages paid to you by your employer to be sized to settle the debt you owe. Your assets might also be seized, or you could get arrested and jailed for tax evasion. It helps to be aware of what might happen when you have back tax problems. A tax preparation service can help you prevent such situations from occurring. They can help you file your taxes on time, and they can work with the IRS if you have a problem so that everything is settled amicably.
