File Tax Returns On-time

The IRS estimates that there are 10 million taxpayers who fail to report their income and pay their tax

. Many taxpayers have opted to simply not file a tax return and they hope that the IRS does not catch-up to them. With recent changes in legislation and technology, the IRS has been more efficient in finding non-filers. There are reasons why everyone should file a tax return.

Penalty for Non-filling

There is a penalty for failing to file a tax return which is separate from failing to pay taxes. A taxpayer can avoid the failing to file penalties by filling a tax return on-time.

Payment Plans and Offer-in-Compromise

There are available options for taxpayers who can not pay their bills. Taxpayers have access to IRS resources and can get help with setting-up an installment agreement or an Offer-In-Compromise. An Offer-In-Compromise is a way to settle your tax debt with pennies on a dollar which can only happen if the taxpayer filed all their tax return.

Save Money on Interests Under Installment Agreements

Interest for nonpayment also accumulates from the time the tax return is due. This means even if you are not filling, interests are accumulating. A taxpayer can save money by setting-up an installment plan rather than just completely not filling and paying the taxes. We have seen a monthly payment as little as $100 per month and a very big sigh of relief from a taxpayer who can stop worrying over their tax returns.

Dont forfeit a Refund

Another reason to file a tax return is that individuals think they owe money, but what if they have a refund. This means that non-filers with a refund just gave a way a low interest loan to the government. Refunds can only be claimed by filing tax returns. A refund can be forfeited if tax returns are not filed on-time.

Substitute For Return

Another reason to file a tax return is that the IRS will file a tax return for non-filers. IRS will prepare a Substitute For Return or SFR. SFR is based on the information they have and someone can guest what information the IRS have. They mostly accumulate information on income and not on taxpayers deductions and credits. The amount owed from an SFR is the highest amount of taxes non-filers would have to pay and it is never what they think they owed. We can always tell if a non-filer is calling me over a tax bill calculated from an SFR. Non-filers are shocked, confused, and angry over that statement.

Liens based on SFR can ruin your credit

An effective payment plan does not show or hurt someones credit. As a matter of fact, it does not show up on any credit standing because it means that taxpayers are not a tax delinquent when they have a payment plan. An IRS tax lien based on an SFR which was caused by not filling a tax return and ignoring tax notices will show-up on a non-filers credit report.

Other Institutions Need Your Tax Returns

Another reason for filling a tax return is that some institutions need your tax return to determine some form of eligibility. Small business owners need their tax return for their childrens financial aid application or to qualify for a business loan or line of credit.

by: Exceltax

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