The 2017 federal income tax-filing deadline has passed for most people who did not extend the filing date for the 2017 tax return. So, the people who still haven’t filed a return or an extension to file, and those who also haven’t paid their 2017 taxes (there is no extension permitted to late-pay the 2017 tax due) need to address their non-compliance. Failing to file a return (when required under the law) or pay the tax is a misdemeanor crime.

Didn’t file by April 18? There is no penalty for filing a late return after the tax deadline if a refund is due. Penalties and interest only accrue on unfiled returns if taxes are not paid by April 18. The IRS provided taxpayers an additional day to file and pay their taxes following system issues that surfaced early on the April 17 tax deadline. Anyone who did not file and owes tax should file a return as soon as they can and pay as much as possible to reduce penalties and interest. Contact your tax professional for assistance.

Filing soon is especially important because the late-filing penalty on unpaid taxes adds up quickly. Ordinarily, this penalty, also known as the failure-to-file penalty, is usually 5 percent for each month or part of a month that a return is late. It maxes-out at 25%, but quickly, so file sooner than later. Again, your tax professional can assist you.

If a return is filed more than 60 days after the April 18 due date, the minimum penalty is either $210 or 100 percent of the unpaid tax, whichever is less. This means that if the tax due is $210 or less, the penalty is equal to the tax amount due. If the tax due is more than $210, the penalty is at least $210.

Is there penalty relief? In some instances, a taxpayer filing after the deadline may qualify for penalty relief. If there is a good reason for filing late, an explanation should be attached to the return. Contact your tax attorney for optimal language to use in that explanation.

Taxpayers who have a history of filing and paying on time may qualify for “first-time penalty abatement” relief. A taxpayer will usually qualify for this relief if they haven’t been assessed penalties for the past three years and meet other requirements. Contact your tax attorney to assist with this relief.

House-keeping items: Changing your withholding. Because of the 2017 tax changes taking effect in 2018, if you are a Form W-2 employee, including if you have other sources of income, you need to perform a paycheck checkup now. Doing so now (it is already May!) will help avoid an unexpected year-end tax bill and possibly a penalty. It may also reveal you are withholding too much tax. Contact your tax professional for advice as to changing your withholding.

Do you owe taxes or need to make installment payments? If you owe taxes and cannot full pay, but need to pay over an extended period of time, contact your tax attorney for assistance in obtaining the best payment arrangement.

Do you need to fix an error on a return? After filing your return, if you find an error or omitted something from their return (a late arriving or revised Form 1099), you may need to amend your return. This is not preferable and you should seek advice from an experienced tax attorney. You don’t want to file an amended return as such amended returns are scrutinized by IRS agents. Often, an amended return is not necessary if a taxpayer makes a math error or neglects to attach a required form or schedule. Normally the IRS will correct the math error and notify the taxpayer by mail. Similarly, the agency will send a letter requesting any missing forms or schedules. If you need to file an amended return, Form 1040X, Amended U.S. Individual Income Tax Return, must be filed by paper. Those expecting a refund from their original return, should not file an amended return before the original return has been processed. File an amended tax return to change the filing status or to correct income, deductions or credits shown on the originally-filed tax return. It takes the IRS up to 16 weeks for processing amended returns.

Remember the IRS will not call you – they write correspondence. If you receive a telephone call from a person claiming to be an IRS agent, it is a scam. Do not speak with that person and insist they communicate with you by mail. If you receive mail from the IRS and need help responding to an IRS notice or letter, call your tax attorney for advice and an analysis of your case facts. While the IRS notice or letter might explain the reason for the contact and give instructions on how to handle the issue, you should seek experienced legal tax advice on how to respond. Do not delay as there are often short response periods, that if missed, curtail any right to contest the proposed action. Do not rely solely on the internet for answers. The IRS procedures are intricate. An improper response can result in IRS taking draconian actions that could have been avoided, or lessened.

Contact McFARLANE LAW–A Tax Law Firm to help resolve your tax issues.
T. 480.991.0032 or e-mail: stephen@taxlawaz.com