What happens if you don't file your income tax return on time?
Attorney Tom Olsen: We're doing fantastic thank you. Charlie apparently a deadline has gone by for taxpayers and we want to know what happens to people who have not filed timely taxes or extensions?
Attorney Charlie Price: Yes the deadline was last Monday. Now, that for the extension deadline. If you've not filed your 2015 tax returns, you are late. What that means is that the IRS is now adding 5% per month on top of your tax debt up to 25%. It's really important to get those tax returns in now and not wait any longer because it could substantially increase the amount of tax debt you owe.
But there's other problems besides that, you may not get a refund if you wait too long. The IRS won't work with you to solve your tax problems or if you owe money, they won't work with you to solve that until you file your tax returns.
Also the IRS may file what is called a substitute for return if you don't file it yourself and generally almost always that tax debt is a whole lot more than what it really is. They're going to come after you and say, "You owe two or three times what you really do" and start coming after you for that. Also it really becomes an issue where you're not paying or following multiple years, they can come after you criminally for not filing. You're not filing because you think you owe them some money and you're hoping that you can avoid having them take collection activity. They're going to get you anyway, do yourself a favor and get the tax returns filed now.
Attorney Tom Olsen: Charlie, tax returns are actually due April 15th as I recall. But from April 15th to last Monday is pretty easy to get an extension?
Attorney Charlie Price: You just file a little form just to get an extension. It's till October 15th normally, unless that falls on a holiday or a Saturday or Sunday which it did this year. That's why it was due on the 17th this year rather than the 15th, but that time is run.
Attorney Tom Olsen: Even when you file those extensions, you're still obligated to send some money to the IRS if you estimated what you think your tax liability may be?
Attorney Charlie Price: Absolutely.
Attorney Tom Olsen: You're not delaying the payment?
Attorney Charlie Price: Not at all.
Attorney Tom Olsen: But on October 15th, no more extensions, that's it and you may file at a later date but you're now going to owe the IRS a penalty, no ifs, ands or buts?
Attorney Charlie Price: Starting at 5% a month.
Attorney Tom Olsen: That's pretty substantial.
Attorney Charlie Price: It sure is.
Attorney Tom Olsen: Okay. Then when you said that the IRS will sometimes file a tax return on your behalf, I guess that's just based on whatever 1099s that they've received?
Attorney Charlie Price: Or sometimes they do it based on past years but generally 1099s or other information and when they do that, they only give you one exemption and no other deductions whatsoever.
Attorney Tom Olsen: Well, just out of curiosity, how often do you see the IRS actually doing that? Filing a substitute return on behalf of people?
Attorney Charlie Price: Very often. People are always saying, "Hey the government did it for me, they're doing me a favor." No, they're not. They're trying to get you in the collection system, it's not doing a favor but they do it all the time.
Attorney Tom Olsen: Let's say that the IRS did file that return on your behalf and they way overestimated the amount of tax liability that you have. Are you allowed to then go and amend that eventually and file a proper return?
Attorney Charlie Price: Absolutely and we do that every time because again that's exactly what happens is the tax liability is much higher and if we're going to end up paying it back being an installment agreement, somewhat of a situation like that and we want to make sure we get the correct amount. We'll always follow tax return on top of their substitute for return so we get the right amount.
Attorney Tom Olsen: I got you. Hey Charlie remind the listeners about the book and how people will have access to it?
Attorney Charlie Price: Yes I wrote a book it's called I Can't Pay The IRS Now What? and we offer it free to your listeners. If they go to theirsbook.com, they can download it free and can get a hard copy. Or they can download my app which is IRS1099. They can just go to Apple or Google and download that, they can get it through there and it's got a lot of interesting videos and things as well.
Attorney Tom Olsen: Yes Charlie, I saw your app and that is quite slick, nicely done on that.
Attorney Charlie Price: Thank you very much.
Attorney Tom Olsen: Tell the listeners how they might reach you at your office?
Attorney Charlie Price: They can call us actually through the IRS1099 site which is irs1099.com or 855-IRS-1099.
Attorney Tom Olsen: Thank you Charlie. That's attorney Charlie Price with the Price Law firm right here in Orlando and of course when we have clients who call us that have some tax needs issues with the IRS of course we're going to refer them to our good friend Charlie Price.