Michelle Singletary's The Color of Money
Hard economic times can bring out the worst in people.
As the April 15 tax deadline approaches, you may be thinking of not filing a return if you owe additional money to the Internal Revenue Service. Or you may be tempted to file a fraudulent return to boost your refund by taking deductions you know you aren't entitled to claim.
It seems so obvious to say that if required, you should file your tax return every year and not cheat. Except there are people who do bet that the IRS won't catch up to them. But when and if the IRS discovers what you are doing, the result is not pretty.
Aside from the penalties, do you want that mental anguish of wondering if you're going to be caught?
Okay, maybe you don't have a conscience. So let me lay out the financial consequences of failing to file and failure to pay what you owe, and see whether this doesn't put a little scare in you:
-- The penalty for filing late is usually 5 percent of the unpaid taxes for each month or part of a month that a return is late. This penalty typically stops accruing after five months. But you can incur additional penalties if fraud is involved, said IRS spokesman Eric Smith. If you cannot pay any or part of the taxes you owe, at least file your return. You can work out a payment plan with the IRS. You can apply online at http:/
-- You will have to pay a failure-to-pay penalty of one-half of 1 percent of your unpaid taxes for each month or part of a month after the due date that the taxes are not paid. You can cut this penalty in half by setting up a payment plan, Smith said.
-- The failure-to-pay penalty rate increases to a full 1 percent per month for any tax that remains unpaid the day after a demand for immediate payment is issued, or 10 days after you get notice that the IRS intends to levy certain assets.