If you owe the IRS $1000 by April 15th and you don't file your taxes, and you don't pay your taxes, you will effectively owe them $1290 by year end! I outlined how below:

First, the failure to file penalty is 5% each month or part of a month your tax return is not filed with a maximum penalty assessed of 25% of tax due(maxed-out in 5 months - 25%). $1000 x 0.25 = $250 penalty.

Second, the failure to pay penalty(separate from the failure to file penalty) is generally 0.5% for each month or part of a month your taxes are not paid with a maximum penalty assessed of 25% of tax due(maxed-out in 4 1/2 years - 25%). Year end is 7 1/2 months away from the tax return due date, so that will be considered 8 months to the IRS( 8 x 0.05% = 4%). $1000 x 0.04 = $40 penalty.

Last, Lets add it all up... $1000 already owed + $250 failure to file penalty + $40 failure to pay penalty = $1290. That is right... $1290 by year end! That is a whopping 29% increase in tax liabilities by year end from the tax return due date with a comparable full year ratio of a 43.5% increase in tax liabilities with penalties and interest assessed from the IRS! Ladies and gentlemen... that is a lot more then the highest rate credit card!

In leaving, remember that a $60 penalty for failure to pay will be added on each year the $1000 owed in tax is not paid until the failure to pay penalty is maxed-out at 25% of the tax due in 4 1/2 years... $1290 + 60 = $1350, $1350 + 60 = $1410, 1410 + 60 = $1470, $1470 + 60 = $1530...maxed-out at $1500 because of the failure to file maximum-25% of a $1000 tax due(+$250), and the failure to pay maximum-25% of a $1000 tax due($250) added together.

If you have back taxes, unfiled taxes, and/or owe the IRS we can help. Please contact us today to schedule your appointment. Thank you.

For more information go to TAX TIPS at www.SolidTaxServices.com

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