Sunday, February 22, 2015

Don't Play the Waiting Game with Taxes

Although the IRS recommends that you file your taxes on time even if you can't pay for them immediately, the actual payment is still necessary. The longer you defer your tax payment, the more aggressive the IRS will be in collecting your back taxes.

Under the Internal Revenue Code, the IRS has up to ten years from the date of tax assessment to pursue legal action against deferring taxpayers. This deadline for the collection is known as the collection statute expiration date (CSED). In other words, this is the statute of limitations for taxes. Go beyond the CSED and the IRS can't collect from the taxpayer anymore.

You might think that playing a ten-year waiting game is the best way to avoid taxes, but it isn't. The effects of deferring taxes compounds the longer you delay:

·         Your taxes will accrue an interest rate of 0.5 to 1 percent every month. If you fail to file and pay, the interest rate becomes 5 percent.
·         You'll keep receiving notices from the IRS.
·         Any refund will be lost, in addition to the forfeiture of your Social Security (or any benefit) under the Federal Payment Levy Program.
·         Get a tax lien, which affects your ability to get a loan, and lose your property.
·         Be imprisoned for willful tax evasion.

Don't get in more trouble by playing the waiting game. Allow a tax lawyer to help sort your taxes out.

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