If an individual fails to file and pay their taxes on time, there are several consequences they may face, depending on the severity of the violation. Here are some potential consequences:
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Late Filing Penalty: If a tax return is not filed by the due date, including extensions, the IRS may impose a late filing penalty of 5% of the unpaid taxes for each month or partial month the return is late, up to a maximum of 25% of the unpaid taxes.
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Late Payment Penalty: If taxes are not paid by the original due date, the IRS may impose a late payment penalty of 0.5% of the unpaid taxes for each month or partial month the taxes are not paid, up to a maximum of 25% of the unpaid taxes.
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Interest: Interest will accrue on any unpaid taxes from the due date of the return until the taxes are paid in full. The interest rate is determined quarterly and is currently set at 3% per year.
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Levy and Seizure: If a taxpayer fails to pay their taxes, the IRS may seize property, including bank accounts, wages, and personal property, to satisfy the debt. The IRS must follow specific procedures before taking any levy or seizure action.
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Criminal Charges: In extreme cases, where there is evidence of deliberate tax evasion, the taxpayer may face criminal charges, including fines and imprisonment.
It is important to note that there may be exceptions or limitations to these consequences, depending on the specific circumstances of the case. For example, if a taxpayer can demonstrate a reasonable cause for their failure to file or pay on time, the IRS may waive penalties.
If a taxpayer is facing penalties, interest, or seizure of assets by the IRS, they should consider seeking the advice of a tax attorney or professional to determine their legal options. It is essential to act quickly to avoid further penalties and to protect their rights under the law.
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