The Internal Revenue Service (IRS) expected taxpayers to file and pay their tax bill for 2019 by July 15, 2020. What happens to those who failed to meet this deadline? The impact depends on a variety of factors.
Factor #1: The presence of an extension
Taxpayers can request an additional extension. However, the IRS will likely charge a late fee for taxpayers who requested and received an extension to pay and file their taxes, generally in the form of a percentage of their tax bill.
There are some exceptions. For example, those who are serving active duty in the military generally receive an extension without any additional penalties. The IRS has also been known to offer extensions to those who are negatively impacted by natural disasters like a hurricane.
Factor #2: Failure to file
A complete failure to file or reach out to the agency in an attempt to get an extension could potentially lead the IRS to claim an attempt at tax evasion. Tax evasion is a serious criminal charge that can come with high financial penalties as well as potential imprisonment. As a result, it is imperative to file taxes as soon as possible.
Factor #3: Inability to pay
Taxpayers who are unable to pay their tax obligations still have options. In some cases, an offer in compromise can result in a lower tax bill. And others, and installment agreement may be a more manageable option.
Those who find themselves struggling to meet their tax obligations are wise to reach out to legal counsel. A tax attorney can review your situation and discuss the impact of each option, better ensuring you choose the right option for your situation.