As per the Internal Revenue Code and regulations, taxpayers are required to file their federal tax returns by the due date of April 15th each year. Failure to file a tax return or filing a tax return after the due date can result in various consequences.
One of the most significant consequences of failing to file a tax return on time is the imposition of penalties and interest by the Internal Revenue Service (IRS). The penalty for failing to file a tax return can be up to 5% of the unpaid tax for each month the return is late. The penalty can accrue up to a maximum of 25% of the unpaid tax.
In addition to the penalty, the IRS can also charge interest on the unpaid tax amount until it is paid in full. The interest rate is determined quarterly and is typically based on the federal short-term rate plus three percentage points.
Individuals who fail to file a tax return may also miss out on a refund to which they may be entitled. Taxpayers have up to three years from the original due date of the tax return to claim a refund. After that time, the refund is forfeited.
In certain circumstances, failure to file a tax return can also result in criminal charges being filed against the taxpayer. This typically applies to situations where the taxpayer has engaged in willful tax evasion or fraud.
It is important for taxpayers who have not filed their tax returns to take action as soon as possible. The longer a tax return remains unfiled, the larger the penalties and interest will become. Taxpayers who are unable to file their tax returns by the due date can request an extension from the IRS. However, an extension only grants additional time to file the tax return, not to pay any tax owed.
If a taxpayer is unable to pay the full amount of tax owed by the due date, they may be eligible for an installment payment plan or an offer in compromise. It is advisable to seek the services of a licensed tax professional or attorney to determine the best course of action for your specific situation.
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