The Mistake of Missing Your Tax Filing Extension

It's entirely possible that you weren't prepared to meet the April 15th filing deadline this year and were forced to request an extension. This afforded you an additional six months to get your return in by October 15th. But if you missed this second deadline, you'll want to take action without delay.

The worst thing you can do is to underestimate the inevitable IRS response, following failure to file a return. While the consequences can vary depending on your situation, a swift resolution is likely to be your best move. The IRS has powerful methods for dealing with neglectful taxpayers.

Examining Your Circumstances

It's worth noting that some individuals are exempt from filing at all, though this typically applies to those who fall below a certain income level (see IRS.gov for details). Alternatively – and especially if you requested an extension to begin with – you may be among the millions who are required to get a return in. If this is the case, you may wish to first consider your liability.

Assuming that you do owe, there are few things to remember. First, while filing an extension may have prevented you from a failure-to-file penalty, you're still liable for any interest on your liability (this begins on the first day that you missed the original deadline). However, if you missed your October 15 due date, you can be charged both penalties and interest. The longer you wait to file and pay, the more you're going to spend.

Substitutes and Assessments

In the event that you don't ever get around to filing, the IRS can ultimately file for you. After providing you with a series of reminders, prolonged inaction can lead to a Substitute for Return. This substitute allows the IRS to calculate your liability by using income information provided by your employer(s) and bank. This generally does not work out in your favor, as a Substitute for Return includes none of the credits or deductions for which you may be eligible.

Once the IRS files on your behalf, you'll be sent a Notice of Assessment; this will include your balance (which is now considered a tax debt) plus any interest and penalties. If you choose to disregard this assessment, the IRS can eventually take aggressive collection measures. Among the actions you may face include a levy against your bank account or garnishment on your wages.

Salvaging the Situation

Regardless of how far you've fallen behind on your tax duties, you can still catch up. Even if the IRS has filed a Substitute for Return, you can still file on your own and take advantage of any applicable tax breaks. Obviously, resolving the issue sooner rather than later prevents complicating future filings with your delinquent balance.

If your tax liability is more than you can comfortably afford, there are a number of resolutions for which you may qualify. Consulting with a licensed tax professional may be to your advantage to ensure that you don't pay any more than you're legally obliged. Failing to miss any tax deadline doesn't have to spell disaster as long as you handle it in the smartest way possible.

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