|
July 16, 2004
With summer in full force, no one likes to
think about taxes. But if you were one of the many people who got an automatic
extension of time for filing until August 15, that date is rapidly approaching.
If you have not filed yet, YOU ONLY HAVE TWO CHOICES other than FILING NOW:
FIRST: You can get an additional two
month extension of time till October 15th provided you can prove undue hardship.
You must request the time in writing by August 15th (must have requested the
August 15th extension) and be specific as to sufficient cause to require the
extension. The use of "illness" is too vague. The IRS will let you know if you
are or are not granted. the additional time. If the request is denied, you get
an automatic additional 10 days from the due date (August 25th) or from the date
on the denial, whichever is later.
SECOND: You always have the freedom to
not file. However you need to understand the penalties that come into play when
you do not file:
1 - Interest accrues an any balance due from
the original due date (April 15th) to the date of payment of the tax.
2 - The normal three year statute which
closes the tax year to further review by the IRS never begins.
3 - If the IRS prepares a return and issues
an assessment based on the information they have in their file, the statute in
#2 above does not begin to run.
4 - The IRS can assess tax and proceed to
collection at any time.
5 - A failure to file penalty of 5% per
month, up to 25%, will apply. If over 60 days past due, a minimum of $100 or
100% of the tax due (whichever is less) will apply.
If the IRS considers it willful neglect, the
penalty increases to 15%, up to 75%.
6 - A failure to pay penalty of one-half of
1% of the tax not paid, for each month it remains unpaid, up to a maximum of
25% will apply.
You may think you only have a small balance due
and therefore risk little by not filing your tax return. I caution you to
consider #2 and #3 above. If the IRS decides to assess you a high tax and you
have not kept your records to prove otherwise, you will be stuck with what they
say. The same applies when you have a refund. Plus, your refund is lost after
three years has gone by.
Until you file your tax return and the statute
of three years from the date of filing runs, you are not home free. Sleep better
and file those tax returns.
If you owe money and cannot pay -- that's a whole
another column!
Give me a call and we can decide how to proceed
with "facts" and "figures" rather than nightmares of what could be.
Sincerely,
Millian M. Toms
or
milliantoms@aol.com
|
