Filling out and submitting a federal tax return can be an intimidating, confusing or a simply annoying endeavor for Texas taxpayers, but the Internal Revenue Service is not known for its leniency. Individuals who fail to file accurate returns or pay the taxes they owe face significant fines or audits. However, those that fail to meet the April 15 filing deadline will likely find themselves struck with even more harsher penalties.
Taxpayers who file a timely return but have not paid all their taxes are typically forced to pay a 0.5 percent penalty on any unpaid sums, plus interest. However, those that do not file their returns or request an extension by midnight on April 15 face a staggering 5 percent penalty, with interest going up to a maximum of 25 percent. This means that an individual who owes $5,000 in federal taxes but fails to meet the IRS’s deadline must pay an additional $250 for every month they go without paying off their deficit. Conversely, that individual would be subject to a monthly penalty of just $25 if he or she requests an extension.
Experts recommend that those unable to pay their taxes by the April 15 deadline either request an extension or contact the IRS well in advance. The agency typically makes exceptions for those who have not paid their taxes due to a catastrophic event such a natural disaster, medical emergency or death in their immediate families. The IRS may also allow some citizens to opt into alternative payment programs. For instance, it may allow certain taxpayers to pay off their owed taxes in monthly installments without serious penalties.
Paying taxes with a credit card before the deadline can help avoid serious penalties while giving the taxpayer additional time to find the money needed.
Those who failed to file a timely extension and find themselves owing substantial amounts to the IRS for penalties and interest may seek advice from an attorney to see if there are options available to reduce the excessive amount owed.
Source: Deming Headlight, “Tax deadlines are real,” Jason Alderman, March 4, 2013