Today is April 17th: Tax day. I’m sure that it will be discussed during the day’s talk shows and news broadcasts, and there will be long lines at the post offices that stay open until midnight. There will be reminders aplenty around you today that this is the day, the final day, the deadline, the “do it or go to jail” day.
In reality, that’s all hogwash.
In all actuality, there is only one firm, hard deadline today for most taxpayers: Today is the last day the IRS will accept e-files. If you file tomorrow, you have to mail it in.
What about an extension? Yes, if you want to file an extension, it’s a good idea to do so. But NOT filing an extension doesn’t have any real consequences.
If you owe the IRS money for 2011, then yes, today is theoretically the deadline to pay it. But for most people reading this particular article, the reason they’re reading this info in the first place is because they don’t have the cash on hand to pay their tax bills. So what really happens if you don’t file and pay on time?
Really, nothing of non-monetary consequence.
Yes, you’re going to pay some interest and penalties if you owe. There are both late filing penalties AND failure to pay penalties, and yes, they’re steep. These penalties are a percentage of what you owe, as are interest charges. Interest is compounded daily, which starts to add up.
If you’re able to pay your taxes with cash, a credit card, or borrowing the money from relatives, then do so, and do it on time. Even if you owe several thousand dollars and have room on a credit card to pay it, then do so, and do it on time — the finance charges on the card are going to be a lot lower than what the IRS will charge you over the course of 6 months to a year.
If you owe the IRS so much money that you simply can’t pay it no matter what, then don’t fret too much. If this is the first time you’ve accrued a tax liability, then the IRS has special rules that allow for the forgiveness of penalties for first time offenders.
If you have previous tax liabilities, then this will get added on to your total. As your total grows, so does your eligibility for certain tax resolution programs, such as the Offer in Compromise or the Currently Not Collectible program.
Here’s my bottom line advice: If you can’t pay your 2011 tax bill today by any means, then accept the fact that penalties are going to be added on, and start thinking about what arrangements you can make to take care of the situation. If you have questions regarding your personal situation, be sure to reach out to one of the local tax firms in our directrory.