Why File Late Taxes?

There are plenty of reasons to file late; many of which involve saving money

There are plenty of reasons for not filing a tax return with the IRS: maybe you forgot, maybe you didn’t have enough money to pay your tax bill. Before you know it months turn into years and you’re on the hook for multiple years of un-filed tax returns.

Even though facing the IRS may seem frightening, there are plenty of good reasons to file a late return instead of putting it off.

Filing saves you money

Yes, I know it sounds counter-intuitive, but filing your late tax voluntarily actually saves you money. Here’s how.

First of all, if you don’t file a return, the IRS will estimate your tax liability for you, based on the limited information they have. They will then come after you for this amount. This is bad for you because when they estimate your tax liability the IRS won’t take into account every exemption, credit, and deduction you’re entitled to. Voluntarily filing on a site like PriorTax will go a long way toward cutting down your tax liability.

Penalties and interest

Not paying your tax bill risks tacking penalties and interest onto the tax liability that you already owe. The good news is that you don’t have to pay any penalties or interest if you due a refund, even if you file late. So if you are due a refund, there’s no reason not to file.

And if you do owe money, you may end up having to pay a failure-to-file penalty and a failure-to-pay penalty, and interest on top of this. All of these changes grow larger with every day that your return is late or you liability unpaid. Filing as soon as possible is the only way to minimize your tax burden.

The IRS has the power to take drastic action

If you don’t voluntarily pay your tax bill, the IRS has the legal right to take some pretty extreme steps to collect it. If you owe the IRS money and make no effort to pay they can

• force you to sell or mortgage assets
• force you to take out a loan
• levy your bank accounts, wages, or other assets
• outright take your assets

Needless to say, working out a reasonable payment plan with the IRS is far preferable to any of the above options.

Plus, the IRS could file a Notice of Federal Tax Lien, which can negatively impact your credit rating. This means that on top of owing the IRS money you may be unable to:

• rent an apartment or buy a house,
• purchase a car, or
• take out any sort of loan

Here’s what to do

PriorTax can help you resolve your late tax problems with the IRS.

First of all, we offer you the ability to file your late tax returns for any year dating back to 2005. Our application will take advantage of every component of the tax code to ensure that you owe as little as possible. And who knows, if you’re filing for one of the last three years you might even get a refund.

If you do owe money, PriorTax can negotiate with the IRS to minimize your tax debt. We may be able to help stop wage garnishment, stop liens, levies, and seizures imposed by the IRS, diminish the amount you owe in penalties, and work to eliminate some of your tax debt or establish a reasonable payment plan.

The most important thing to remember: don’t delay another day!

Photo via Alexandre Duret-Lutz on Flickr.

This entry was posted on Wednesday, June 19th, 2013 at 2:57 pm and is filed under Taxes for Prior Years. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.