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San Mateo, CA. The deadline to file your 2022 federal tax return was, for most taxpayers, April 18, 2023 this year. If you filed an extension, the deadline will be October 16, 2023.
It is important to file your 2022 federal tax return EVEN IF YOU CANNOT PAY for a number of reasons:
- Failure to file a tax return will result in a penalty and interest if you cannot show that the cause of the failure to file was due to reasonable circumstances.
- The failure to file penalty is stiff: 5% of the unpaid tax is assessed each month (or part of a month) until the tax return is filed. The maximum penalty is 25%.
- Interest runs both on the tax due and the applicable penalties that accrue until the balance is paid. The interest rate fluctuates per quarter-for the quarter beginning 7/1/23, the interest rate for taxes owed is 7%.
- Filing a tax return begins the collection statutory expiration date (CSED). Generally speaking, the IRS has 10 years to collect once a tax is assessed. Filing a return starts that clock ticking.
Failing to file a tax return because you cannot pay the taxes due on the return is a bad strategy. It is much easier to work with the IRS on your collection alternatives when the tax returns are filed--in fact, if unfiled returns are noted on your tax account transcript, the IRS will generally not work with you until those back taxes are filed.
If you owe and you cannot afford to pay, contact a tax attorney who can help you with the collection alternative landscape. Contacting the IRS is also an option, but remember: Does the IRS really have your best interest in mind when working out a plan?
In my experience, the IRS's mission is to collect the most amount of money in the shortest period of time from taxpayers while staying with the bounds of the Taxpayer Bill of Rights.
There are too many nuances and case by case circumstances to go through in a short blog post. Your circumstances are unique and should be evaluated by a tax attorney before contacting the IRS. Go to the IRS with a plan, or the IRS will provide you with one that may not be the best for you.
If you have any questions about IRS collections, CSED expiration dates (such as: DO I STILL OWE THIS TAX BILL FROM 2011?, etc), or penalty relief, feel free to contact me at the email or phone number below.
Kevin Rego
650.933.5222
