Problem? Yes and No. No because you can file ASAP. Yes, because penalties and interest can be fairly steep. (Generally, interest is charged on any unpaid tax from the due date of the return until the date of payment. The interest rate is determined every three months and is the federal short�term rate plus 3 percent. Interest is compounded daily)
(If you owe tax and don’t file on time, the total late�filing penalty is usually four and one-half percent of the tax owed for each month, or part of a month, that your return is late up to five months. If your return is over 60 days late, the minimum penalty for late filing is the smaller of $100 or 100 percent of the tax owed)
If IRS has sent you communications that you had to sign for – then your time may be short before they start the process to levy your wages or your bank account. Once this happens you will need to talk to them one way or another, either by calling them or by contacting a tax professional who will call them for you. (I recommend the second option)
If IRS levies your bank account, your bank must hold funds you have on deposit – up to the amount you owe, for 21 days. This period allows you time to solve any problems from the levy or to make other arrangements to pay. After 21 days, the bank must send the money, plus interest if it applies to the IRS. Contact Us (Note: If you own Real Estate or have a Small Business and IRS has sent an intent to Levy, it is best to contact an Enrolled Agent or a Tax Professional as soon as possible).
Your question might be, at this point, “If I did NOT file my taxes, how do they know how much I owe”? Answer: IRS completes your tax return for you; based upon 1099s and W-2 information from your employer. The tax liability that IRS computes stands as the collection amount UNTIL you file your tax return for that year. And of course their tax return almost always generates a higher tax liability then if you had filed your own taxes!
Taxes Will Travel specializes in filing Back Taxes for Individuals. A consent form from the client is necessary in order to obtain income information from IRS for the year(s) in question. Once this task is completed and SS numbers, dependents, deductions, etc information is received the tax return(s) can be completed immediately.
Cassandra is a Registered Tax Professional and Instructor for Basic Tax Classes in the San Francisco Bay Area. Her online tax service http://www.taxeswilltravel.com specializes in filing Back Taxes for IndividualsArticle Source: http://EzineArticles.com/?expert=Cassandra_IngrahamBe aware that at the Law Offices of Darrin T. Mish, P.A. we can also prepare your back tax returns. The posting of this article does not represent an endorsement of this particular author’s services.