Tax Filing Tip - Filing Late

The deadline to submit tax returns for 2007 is April 17th. If you miss the deadline, you must file a return as soon as possible. If you owe taxes, the IRS will impose fines, interest on money owed and penalties. However, interest and penalties will not be imposed if a refund is due.

The IRS rules state you must file the return within three years of the due date to get a refund. Generally, you have to pay a late-payment penalty of 0.5 percent of the tax owed for each month or part of a month that the tax remains unpaid after the due date up to 25 percent of the tax due. The 0.5 percent rate increases to 1 percent if the tax remains unpaid after several notices have been sent to you and the IRS issues a notice of intent to levy.

The penalty will not be imposed if you can show reasonable cause for the failure to pay. If you did not file on time and you owe tax, you may owe an additional late-filing penalty unless you can show reasonable cause. The combined penalty is 5 percent (4.5 percent late filing, 0.5 percent late payment) for each month (or part of a month) that your return is late.

When filing a late tax return, you must ask for an extension to file the return. The four-month extension is only for filing; all taxes due must be paid in full. You can e-file form 4868 or mail a form to the IRS using certified post.

If you are unable to pay the taxes due in full, request account resolution packages from the IRS. Never avoid filing a tax return. Be honest and file accurate returns, and find out from the IRS what procedures are to be followed for filing late.

If the procedures for late filing seem too complicated, consider taking the help of a tax professional who has several years of experience with late filing of tax returns, someone who knows the laws inside and out.

Tax professionals will be able to deal with incomplete documentation and deal with IRS negotiations regarding your taxes, penalties or interest. Find out all about IRS tax penalties and interests charged. Considerable information can be found on the IRS Web site.

Before you file late tax returns, find out what the statutes of limitations are and plan your tax strategy taking these into consideration. Check your returns thoroughly and ensure all documents are in place. Sit down and plan on how you will get out of tax debt.

Seek the help of tax professionals and plan how you will get out of trouble and streamline your tax payments so that you get back on schedule. Review your overall tax situation and find ways to reduce your taxes, make tax payments on time and organize your financial documents in a way that you are able to file tax returns on time every time.