Here's why not filing a tax return is a bad idea!!
People sometimes fall off track with their tax filings because of life circumstances such as health problems, passing away of loved ones or financial hardship. The IRS doesn't penalize people for late filings if there is reasonable cause for non-compliance.
However some people frequently don't file their tax returns. What they don't realize is that failure to file a tax return is a serious problem that can come back and haunt them. Some of the consequence of not filing tax returns are -
1. if you are owed a refund. you could lose that money if the statute has expired unless an exception applies
2. You will be charged penalties and interest and it is very difficult to get those waived if non-compliance is a regular occurrence
3. If the non-compliance is due to willful failure,it can be classified as misdemeanor.
4. In instances where tax evasion occured, willful failure to file is elevated to a felony. And if a taxpayer is charged with criminal tax evasion, it can lead to hefty fines and jail time
5. The IRS can prepare a tax return for you based on the income they have on file. These returns are not correct because the IRS doesn't have your deductions. If you do not file a tax return you will lose exemptions, deductions and credits which you are entitled to claim on the return
6. If taxpayer does not file after multiple attempts by IRS to secure a return, the IRS will start enforcement action based on the tax return prepared by them, resulting in tax liens, levies, wage garnishments and seizures
Contact us to get into compliance and make a fresh start with a clean state. Call us at 602-904-6535!
Vani Murthy, CPA | 09/25/2020