If you miss the deadline to either make your tax payments or file your return, you could be facing some costly repercussions. While you should not purposely miss a deadline, it does sometimes happen.

If you find yourself in this situation, the most important thing is to pay the tax or file the return as soon as possible. The longer you wait the higher your penalties and interest will be. For example, failure to file your return will accrue penalties equal to 5% of your unpaid tax for up to 5 months. Furthermore, different interest and penalties can compound potentially leading to a hefty bill in these fees alone.

Some of the more common penalties taxpayers experience are failing to file their return or failure to pay their taxes. If you fail to pay your taxes for an extended period of time, the IRS may issue a levy against your wages or bank accounts. In the case of wages, this means that your employer will be forced to take part of your paycheck and give it to the IRS to start paying off your debt. This results in extra forms and work for your employer - not a good look for you as the employee.

The first sign of trouble will be notices from the IRS. Anytime you receive a notice from the IRS, you should consult your tax preparer. Generally, the IRS will issue a couple notices before taking more serious actions against you such as enforcing a levy. If you act after the first notice, you can help prevent both higher costs and more serious consequences.

In some cases, you may be eligible for penalty relief. Find out if you qualify here.

As with all tax related issues, we highly recommend you consult your tax preparer. They will be able to help you assess the damage and mitigate (as much as possible) any accrued interest and penalties.

More information here:

https://www.irs.gov/businesses/small-businesses-self-employed/understanding-penalties-and-interest

https://www.irs.gov/businesses/small-businesses-self-employed/filing-past-due-tax-returns