Not having the funds available to pay owed taxes can certainly be a burden on any Georgia resident. Though the idea of not filing one’s taxes may seem appealing in hopes of avoiding that tax obligation, it could actually make the situation worse rather than providing tax relief. In addition to still owing the outstanding balance to the IRS, the agency could also put fines and other penalties in place that create an even greater financial debt.
When it comes to not filing a tax return, the following penalties could apply:
- A 5% penalty for the amount owed will be applied on a monthly basis.
- The penalty will accrue every month that the return is not filed or until the amount reaches 25% of the unpaid balance.
- A 3% interest rate could apply each month that the outstanding balance is not paid.
One benefit to filing a tax return even if the taxpayer cannot pay the balance in full is that the penalty for lack of payment is lower. Rather than facing the monthly 5% penalty for an unfiled return and outstanding balance, the penalty would be only 0.5% of the owed balance applied on a monthly basis. Additionally, a person might be surprised to learn that he or she was owed a refund that would have gone unclaimed if that person had not filed.
In the event that Georgia taxpayers do owe to the IRS, it is important that they do not panic. In many cases, individuals can explore the various options the IRS has available for handling owed balances. Offers in compromise, currently not collectible status and other tax relief options could help concerned parties. To gain more information on which could apply to a particular case, discussing the details with experienced tax attorneys may be wise.