Some people procrastinate to file their taxes, while others forget it entirely. The deadline passes them by and then new problems start to emerge. It is understandable that paying taxes is not a pleasurable activity.
Instead, it is an activity that the majority of us hope to never go through again.
However, it is also unavoidable.
Why File for Taxes?
There are many stories you hear on the street. There are tales of people who never file for taxes and get away with it. This kind of story gives flame to such ideas that perhaps you can get away with not paying taxes as well.
Filing for taxes is a fundamental part of being an American. You can follow the procedure and pay what you owe, or you can keep running and face the consequences.
Even if you remember late and feel you do not have enough time, it is better to file for an extension instead of skipping out on the whole activity and hoping for the best.
What if You Never File for Taxes?
Not filing for taxes can result in a variety of repercussions. Either you can be missing out on money owed to you in terms of savings and deductions, or you can be held liable by the IRS for a variety of violations. You can either miss out on the payouts, or you can be ensnared into an audit. Anything is possible.
IRS does not take kindly to defaulters. Without a valid reason, you can face heavy tax penalties, liabilities, garnishments, liens, legal battles, and even prison time.
Following are a few reasons why it is useless neither to file your taxes nor face repercussions;
1. You Cannot Cheat Technology
Technology is an integral part of everything in today’s age. It has made our lives easier than ever before. Technology is part of every organization in some form. The IRS is not different in that regard. The digital age has made everything very fast. IRS used to be a huge beast which took a long time to move.
However, technology has changed those notions of the past.
There are systems and software that can help regulate the huge swathes of information. They can automatically detect any anomalies and raise red alerts that can help the agents track down the offenders with unprecedented speed.
The IRS has many different avenues of receiving information about you, even if you yourself do not file for taxes.
- If you are employed in an organization, then your employer may annually send a copy of your W2 form to the IRS. The information on your tax returns can be easily matched with them.
- Your banks, investment ventures, and even business partnerships send out 1099 forms containing your financial information to the IRS. For instance, the IRS knows for how much was a property sold or rented out by a real estate investor.
2. A Pointless Headache
As you have gathered, not paying taxes brings a lot of headaches. It can become very stressful for you when the IRS finds out. You may not be able to continue living your peaceful life, let alone continue your business or employment. It is better to file, even if you think you may have made a mistake in your haste. You can always file for an extension later to cover any potential errors.
3. Non-Cooperation With the IRS Invites Consequences
Once the IRS has determined that you have not filed for your returns, they will send you a warning. Continue to ignore that and the things may become more difficult. The IRS can also take direct action against you by any number of means. They can;
- Audit you
- Seize or freeze your accounts
- Put a lien against your property or properties
- Garnish your wages and more!
While this is going on, any penalties or interests levied against you will continue to accumulate.
The IRS can also create a tax return for you on your behalf by examining your earnings through other means; such as the W2 form filed by your employer. However, this will not allow you to enjoy any deductibles or other benefits. You might even end up paying a lot more than what you should owe.
4. Follow the Regulations
IRS has a strict code that highlights who needs to file for a tax return. There are certain income thresholds for filing. Even if you think you are exempt, it is better to file a return anyway. You can easily file for a refund if you are entitled to it.
5. A Partial Return is Better Than No Return
Some people do not bother filing for their returns because of a lack of funds. You must find a way to file, even if it is a reduced amount. You can always ask for an extension to gather more funds. However, the consequences of not filing at all are too severe to risk
Note: penalty for failing to file can be 5% of your taxes every month. It can accumulate very quickly.
If you forget to file for your tax returns, then notify the IRS immediately or CPA in Dallas. and ask for an extension and explain your reasons. Ignoring the issue until the next term is not a wise solution. It may create too many problems and headaches for you down the line.