| For One Reason or Another...you didn't file this year. It | | | | Jailhouse Rock: Not to mention, the IRS can legally |
| could be because you forgot, or maybe something | | | | send you to jail for not filing. You have to understand, |
| was financially keeping you from doing so. Or maybe | | | | the IRS is the largest collection agency in the world. |
| you just didn't want to file because you thought you | | | | They're going to get their money. You not filing, |
| could beat the system. Unfortunately to the IRS, they | | | | whatever the reason may be, tells the IRS that you |
| don't really pay attention to why you didn't file. All they | | | | don't care. That does nothing but make their blood boil |
| know is you didn't and you've just given them the | | | | and give them reason to take their actions to the |
| green light to attack. Well it's important to know | | | | fullest extent of the law. In this case, you'll be behind |
| exactly what happens when you don't file. | | | | bars. |
| It Starts With Penalties: As soon as the IRS finds out | | | | How to Stop It: The best way to avoid these situations |
| you haven't filed, they start slapping your debt with | | | | is to file on time, every year. Even if you can't pay off |
| penalties. The Failure to File penalty is 5% of the debt | | | | an amount you might owe, you can certainly call the |
| per month, up to 25%. Chances are good that they will | | | | IRS and set up some form of payment. It's much |
| also hit you with a Failure to Pay penalty, which is 1% | | | | better than letting the penalties and interest add up just |
| of the debt each month. There is no cap on the Failure | | | | because you didn't file. |
| to Pay penalty so the longer you wait, the higher it | | | | Too Late? If your debt is already sky high because of |
| grows. | | | | penalties and interest and you know the reasons you |
| Don't Forget the Interest: As if you didn't have enough | | | | didn't file was because of extenuating circumstances |
| on your plate with penalties accruing, you've also got | | | | (death of a family member, illness of a family member, |
| to think about the interest. The standard for interest | | | | etc.) then you may qualify for penalty abatement. |
| 6% of the debt per year. However, interest is | | | | Speak to a reliable tax professional and see how you |
| compounded daily on top of penalties so the annual | | | | can get your issue resolved. Even if you can't get |
| interest rate is actually much higher than that. Keeping | | | | penalty abatement, you may qualify for something else |
| that in mind, if you owe $10,000 dollars, if a year goes | | | | that can put you in a much better spot than the one |
| by you'll owe $15,000 dollars; let 3 years go by and | | | | you are already in. |
| you'll owe about $35,000 dollars. And that's just from | | | | Now you have the Smoking Gun...Use It! |
| interest and penalties. | | | | |