Taxes are due just about two weeks from today.
We’re hoping that doesn’t come as a shock.
If you don’t file and pay your taxes, however, the things that could happen to you are pretty shocking.
Julius Green, CPA and tax practice leader for ParenteBeard in the Philadelphia region, explained to us the potential consequences of letting April 15 come and go tax-free.
Granted, you aren’t guaranteed to suffer these consequences, and everyone’s tax situation is different, but here are a dozen terrible things that could happen if you don’t do your taxes.
Pay a penalty fee. There are two kinds of “not doing” your taxes — failing to file and failing to pay. “If you fail to file, you get hit with a penalty of 5% of the tax owed, up to five months out, with a minimum penalty of $135, or as much as 100% of the tax owed — whichever is less,” Green says. If you don’t pay, he continues, you’re typically charged a penalty, plus you’ll have to …
Pay interest. “Statutorily, the IRS can’t waive interest,” explains Green. “They want the time value of the money you owe them.” If you fail to pay, you may be paying a penalty plus interest, which is usually determined by the federal short-term rate (anywhere from 1%-4%), plus 3%, for a total of 4%-6%.
Get notices from the IRS. It’s probably fair to assume that no one wants mail from the IRS. But if you don’t file or don’t pay, that’s exactly what could happen. “The IRS gives you multiple opportunities to get it right,” says Green. “They have to send you a notice before taking any action, and usually they need a response in 30-60 days. But many people in this situation know it’s coming, so they panic when they get their notice and shove it in a drawer to deal with when they have the money.”