Common IRS Problem - The most common penalties are Failure to File and Failure to Pay. Both of these penalties can substantially increase the amount owed to the IRS in a very short period of time.
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The most common penalties are Failure to File and Failure to Pay. Both of these penalties can substantially increase the amount owed to the IRS in a very short period of time.
Author: stelen smith
Date: Mar 26, 2011 - 11:41:35 AM
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The IRS penalizes millions of taxpayers each year. They have so many penalties that it's hard to understand which penalty they are hitting with. The most common penalties are Failure to File and Failure to Pay. Both of these penalties can substantially increase the amount owed to the IRS in a very short period of time. To make matters worse the IRS charges interest on penalties. Many tax-payers often find out about IRS problems many years after they have occurred. This causes the amount owed the IRS to be substantially greater due to penalties and the accumulated interest on those penalties. Some IRS penalties can be as high as 75%-100% of the original taxes owed. Often taxpayers can afford to pay the taxes owed, however, the extra penalties make it impossible to pay off the entire balance. The original goal of the IRS imposing penalties was to punish taxpayers in order to keep them in line. Unfortunately, the penalties have turned into additional sources of income for the IRS. So they are happy to add whatever penalties they can and to pile interest on top of those penalties. Individual’s loss is their gain. Under certain circumstances the IRS does abate, or forgive, penalties. Therefore before one pays the IRS any penalty amounts, one may want to consider requesting that the IRS abate the penalties.
Many taxpayers fail to file required tax returns for many reasons. What you must understand is that failure to file tax returns may be construed as a criminal act by the IRS. This type of criminal act is punishable by one year in jail for each year not filed. Needless to say, it’s one thing to owe the IRS money but another thing to potentially lose freedom for failure to file a tax return. The IRS may file "SFR" (Substitute For Return) Tax Returns. This is the IRS's version of an unfiled tax return. Because SFR Tax Returns are filed in the best interest of the government, the only deductions are standard deductions and one personal exemption. One will not get credit for deductions which one may be entitled to, such as exemptions for a spouse or children, interest and taxes on home, cost of any stock or real estate sales, business expenses, etc. Regardless of what is heard of, one has the right to file original tax return, no matter how late its filed.
The IRS can make your life miserable by filing Federal Tax Liens. Federal Tax Liens are public records that indicate the IRS various taxes that are owed. They are filed with the County Clerk in the county from which the business operates. Because they are public records, they will show up on credit report. This often makes it difficult for a taxpayer to obtain any financing on an automobile or a home. Federal Tax Liens also can tie up any personal property that cannot be sold or transferred that property without a clear title. Often taxpayers find themselves in a Catch-22 where they have property that they would like to borrow against, but because of the Federal Tax Lien, they cannot get a loan.
For more info: http://www.kktaxgroup.com/
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