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Right Now, It Pays to Not File Taxes…But Beware

  • 20 December 2016
  • Author: Alexander Carr
  • Number of views: 4479
  • 0 Comments
Right Now, It Pays to Not File Taxes…But Beware

The Treasury Inspector General for Tax Administration (TIGTA)—an Internal Revenue Service (IRS) watchdog—says the IRS is ignoring delinquent taxpayers who owe billions of dollars. According to the agency, the IRS implemented a strategy to identify taxpayers who have not filed a tax return, including taxpayers with expired extensions, on an annual basis.

“The IRS failed to identify and address approximately 1.9 million…2012 and 2013 nonfilers with expired extensions,” a statement from TIGTA reads. “As of May 2016, those taxpayers still owed an estimated $7.4 billion.”

TIGA predicts many of these nonfilers will likely never be notified of their obligations, which includes the filing of a tax return. But does that mean if you didn’t file your return, you’re off the hook? No. The failure has been blamed on everything from technical difficulties to staff layoffs and Congressional red tape. But as those problems are addressed—even years down the road—nonfilers could pay the price.

There’s a big difference between filing an incorrect return and not filing a return at all. When you file a tax return—even if it includes an error—the clock starts ticking on the IRS’s ability to audit it. For basic audits, the IRS is limited to three years from the time the return was filed. If a substantial error is found (for example, more than 25 percent of your income was found to have been omitted), the IRS can look back at six years’ worth of returns.

But if you never filed a return in the first place, there is no statute of limitations. In other words, the IRS can ask for that money at any time, no matter how many years have passed. What’s more, if you don’t pay your taxes on time, the penalties can be severe and increase over time. The longer you wait to resolve your tax debt, the more difficult and costly it will be, says the IRS.

Are you willing to take that chance? For questions or for more information, contact us.

Image Copyright: zestmarina / 123RF Stock Photo

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