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Tax Penalties for Not Filing Tax Returns


Filing and paying one’s taxes can be momentarily painful. After all, there are very few people who can make a significant tax payment and not wonder about all of the other things they could have used the money to purchase or cover. And yet, millions of Americans file and pay their taxes on their own initiative each and every year not concerned with the tax penalties for not filing tax returns. The simple fact of the U.S. system of taxation is that it leans very heavily on voluntary compliance by taxpayers – at least at the outset.

An estimated 20 percent of the total tax gap is created by the failure to file and non-filers of taxes. There are generally two types of non-filers: the true non-filer who has never filed taxes and a stop-filer who filed taxes for a time but ceased his or her filing and payment of taxes. These individuals are likely to face the enforcement mechanisms of the U.S. Tax Code through contact and interactions with the IRS and Department of Justice (DOJ). Taxpayers who fail to satisfy their tax filing and payment obligations are, upon conviction, subject to harsh and significant criminal and civil penalties.

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What is the Penalty for Failure to File Taxes?

If you fail to file your tax returns by the required deadline, typically April 15th for your IRS returns, you are opening yourself up to the possibility of civil and criminal penalties being assessed against you in addition to the back taxes that you owe. It is important to note that you can file for an extension, which will usually be granted if good cause exists, but this must occur before the due date comes. If not, you will, at a minimum, be required to file the past due return and pay any back taxes assessed based on the documents you submitted. Our skilled Tax Lawyers and CPAs at the Tax Law Offices of David W. Klasing may be able to work to convince the agents not to impose additional civil or criminal penalties based on a reasonable cause argument for why you missed the deadline, such as the unexpected occurrence of a medical emergency in the weeks before the returns were due. 

In many cases, however, the IRS can and will choose to impose civil penalties for a failure to file your tax returns on time. These penalties are calculated as follows: if you are a partial month or one full month late, the penalty will be 5% of the amount of your unpaid taxes each month you have been delinquent  This is upped to 10% per month you were delinquent if you were two months (or one full month and one partial month) late, and so on, with a five percent increase per each month the taxes remain unpaid, capped at 25%. If you are delinquent by more than 60 days, the minimum penalty becomes 100% of the unpaid taxes or $135, whichever number is smaller. In months where both a failure to pay and failure to file penalty can be imposed, the five percent non-filing penalty will be reduced by the penalty for non-payment, which is typically one half of one percent of the unpaid taxes.

In cases where your conduct was willful, meaning you deliberately failed to file your tax returns rather than making a mistake or an oversight, criminal charges can also apply. If convicted of willful failure to file taxes, you could face penalties including up to 1 year in jail and up to $25,000 in fines, or $100,000 in fines in the case of a corporation that has willfully failed to file. The longer you wait to file after the deadline has passed, the greater the chance becomes of the IRS choosing to open an audit or criminal investigation into your behavior instead of simply allowing you to pay your back taxes and move on.

How Can a Tax Attorney Help Me with My Failure to File Taxes?

At the Tax Law Offices of David W. Klasing, our skilled Tax Attorneys and CPAs have years of experience working with clients who have not filed their returns on time or requested an extension to get them back into IRS compliance with the most minimal amount of negative consequences. Especially if your conduct was non-willful or has yet to be referred for a criminal investigation, we can work to convince the agency that you had reasonable cause to miss the deadline and that you should not have any penalties assessed if you pay your back taxes and file the returns and any necessary documents. If civil penalties are imposed, we can try to work out a reasonable payment plan with the IRS so that you can pay the fines over a longer period of time.

If your conduct was willful, our priority as Criminal Tax Defense Attorneys will be working to ensure that you do not end up facing criminal tax charges for your actions. If you come to us before an audit or criminal tax investigation is initiated, and we work to help you correct the issue on your own, there will be a good chance that you will not face criminal tax prosecution for your actions if you strictly follow our counsel. The longer you wait to come forward, and especially if a criminal tax investigation has already begun or occurred, will make our job of staving off the filing of criminal tax charges exponentially more difficult, but not impossible. If criminal tax charges ultimately are filed against you, we can try to negotiate a deal for you to pay what you owe plus civil fines in exchange for the charges against you being dropped. If all else fails, we are ready to mount a vigorous defense on your behalf at trial or do damage control through a cooperation based defense depending upon the unique facts and circumstances of your case.

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What to Do When Facing Tax Penalties Due to Unfiled Taxes?


If you are facing penalties and tax complications due to unfiled taxes, contact our Los Angeles tax attorneys at the Tax Law Offices of David W. Klasing today. Our dedicated team of tax professionals are committed to mitigating the consequences faced by taxpayers due to unfiled taxes and other tax concerns. To schedule a reduced-rate tax consultation call our firm at 800-681-1295 or contact us online today.
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