If you owe taxes and don't file them on time, there's also a penalty for not filing them on time. The penalty for not filing the return is usually five percent of the tax due for each month or part of the month in which your return is late, up to a maximum of 25%. You may be able to avoid or minimize these penalties, but completely ignoring your tax reporting obligations isn't usually an option. Under certain circumstances, the IRS is authorized to resolve a tax liability by accepting a payment less than the total.
We may be able to eliminate or reduce some penalties if you acted in good faith and we can show that there are reasonable reasons why you were unable to meet your tax obligations. The best thing to do is to apply as soon as possible and then consider the following payment options. A commitment offer is an agreement between a taxpayer and the IRS that liquidates the taxpayer's tax debt. If both the penalties for not filing the return and for not paying apply, the IRS reduces your penalty for not filing the return by the amount of the penalty for non-payment.
There is a penalty for not filing returns filed after the due date or the extended due date, unless there is reasonable cause to file them after the deadline. For the first month, instead of imposing a 5% penalty for not filing the return plus a 0.5% penalty for non-payment, the IRS would apply a 4.5% penalty for late filing plus a 0.5% non-payment penalty, for a combined total of 5%. We calculate the penalty for non-filing based on how late you file your tax return and the amount of unpaid taxes on the due date of the original payment (not on the due date of the extension). The above article aims to provide generalized financial information designed to educate a wide segment of the public; it does not provide personalized advice on taxes, investments, legal, business or professional.
You can file a tax extension by mailing Form 4868 to the IRS or paying the taxes due using Direct Pay, the Electronic Federal Tax Payment System (EFTPS) or credit or debit card before the tax due date. Fortunately, if the tax agency files an SFR and evaluates the taxes, you won't have to pay the amount it says you owe. This option, known as a first-time reduction, is available if you don't file an application and don't pay fines. The IRS bases its SFR on its W-2, 1099 and other available tax forms, but most of them provide information about your income, but not your deductions.
The IRS generally charges a penalty for not filing tax returns filed after the due date or the extended due date, unless there is reasonable cause to file them late. You can apply for a bank loan, a home equity loan, or request a cash advance from a credit card to pay your tax bill.