(UnitedHeadlines.com) – The Internal Revenue Service (IRS) is warning taxpayers who missed the April 15 tax deadline that they could face massive penalties if they fail to pay their taxes owed or fail to file their taxes.
In a statement on June 10, the IRS noted people should page “what they can as soon as possible” to avoid interest and penalties. According to the IRS, a missed payment will accrue interest on the total amount owed at 8 percent compounded daily. For the unexplained late filing of taxes, there is a 5 percent monthly penalty, and any tax returns filed more than two months late face a fine of $485 or 100 percent of the missed tax payment, “whichever is less.”
Despite the massive penalties, there are options available to taxpayers who still owe taxes. If a taxpayer files on time, pays on time, and has not had any penalties for the past three years, they could “qualify to have the penalty abated,” according to the IRS. If a taxpayer’s reason for failing to pay on time or file is due to a “reasonable cause,” they may also qualify for penalty relief. However, interest will continue to accrue on the unpaid balance until the amount owed is paid in full.
If the amount of taxes owed is less than $100,000, short-term repayment plans allow taxpayers 180 days to pay their taxes owed. For those who owe less than $50,000, long-term payment options let taxpayers make monthly payments for up to 72 months. According to the IRS, taxpayers who owe between $25,000 to $50,000 must make direct debit payments.
While in a payment plan, interest will continue to accrue. However, the payment plan cuts the failure to pay penalty in half.
The IRS statement noted that every year, taxpayers “should check their withholding” to ensure they are not having too little withheld from their checks.
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