If you filed an extension with the IRS, your deadline of October 17th is fast approaching.
When the October deadline comes and goes, you might wonder what will happen to you for not filing your taxes on time.
If You are Owed a Refund.
If you miss both the April 18th and October 17th tax filing deadlines and are owed a refund, chances are that nothing will happen to you. In fact, the IRS will more than likely deduct any interest and penalties you owe from that refund. It is up to you then to file and claim that refund if you want it.
That is not to say you should purposely neglect filing your taxes, however. It is true that the IRS will not go out of its way to remind you to file if it owes you a refund. It does not mind at all that you are lending it more money than you legally are required.
Still, you only have three years to file your return if you want to collect on a refund owed to you. You also should file your next year’s return on time if you do not want the IRS to hold that tax refund as well. It relies on you to file the necessary return if you want to get the refund back to which you are entitled.
If You Owe Money
If you miss the October 17th extended deadline and owe the IRS money, you risk getting yourself into a graver situation. You are encouraged to keep in mind that the IRS receives the same income statements as you do. It has access to statements like:
- W-2s
- 1099s
- 1098s
That verify how much income you have earned during the year. The IRS also knows if you fail to file by the April 18th or October 17th deadline if you have been granted an extension.
Further, the IRS will compile a substitute return for you and then notify you about how much taxes you owe to the federal government. This substitute return will not take into consideration any exemptions or deductions to which you are entitled. It is up to you to include that information on your return when you file.
Once the IRS compiles and notifies you about the substitute return, it will begin collection activity against you. These activities can include levying and seizing your assets including your:
- Bank account
- Retirement savings
- Real estate
- Secondary car or home
- Life insurance policies
You will be notified in writing about the IRS’ intent to seize or levy your assets. You have up to 30 days to dispute the intention or resolve your debt to avoid it. It is critical that you do not ignore written notices from the IRS if you want to protect the assets that you own.
If you avoid filing because you realize you cannot pay what you owe, you may want to consider the options available to you for resolving your IRS tax debt.