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Despite the fact the IRS is the enforcing arm of an almost incomprehensibly complex tax system designed to accommodate the needs of a very dysfunctional republic in which inequality now reigns supreme, the bureaucracy per se are not monsters, just plain folks (who also have to pay unfair rates of taxation like you and me while the hedge managers and the “unearned income” folks are forgiven enough cash to build extra McMansions) doing a thankless job made horribly unpopular by the sheer corruption of the politicians and the overwhelming perception that a lot of public money is being wasted on wars, bankster relief and other grand pickpocketing expeditions that scarcely benefit the public interest. Phew! That was a mouthful.
Among the obligations that cause the most agita among Americans, April 15 must surely count as the queen of all stresses. Why so many people file late is perfectly understandable: no one likes to part with his/her money, especially when the dough is in very short supply, a situation now afflicting the vast majority, and the tax rules are simply not for the faint-hearted. Many careers in heavy alcoholic consumption have been detonated by confrontations with impenetrable forms. Yes, it takes brains, people. And huge tolerance for pain. Indeed, the tax code is the great leveler between accountants and brain surgeons. Be that as it may, the end result is a mad rush to file by the April 15 deadline—or—many believe—land in big doo-doo. If you believe this (and you may be excused for doing so given the perennial media scares that crop up around this time), here’s something that may comfort you. It boils down to this: file within reasonable time and the sky won’t fall. Period. The indispensable Cecil Adams, of The Straight Dope, clarifies the situation in the cardio-beneficial essay below. —PG
PS/ We have also added other opinions to balance the possible risk of Mr. Adams being plain wrong.
What happens if you file your income tax one day late?
Dear Cecil:
It amuses me every year at tax time when a big deal is made of the midnight mailing deadline on April 15. Does the IRS have staff whose job it is to look at postmarks? Are they going to penalize all the returns filed on April 16? I find this hard to believe. I’ve often been tempted to hold my return till the 16th just to see what happens. Is this all an intimidation tactic by Big Brother?
— D. Hansen, via the Internet
Dear D.:
It seems vaguely treasonous to be telling you this, but you’re right: It doesn’t really matter if you file your return a day or two late.
Forty percent of U.S. taxpayers–40 million people–don’t file their returns until the last week. For the first few days after April 15 the IRS is still getting truckloads of returns. An IRS spokesman candidly admits there’s no way they can go through all that paperwork ferreting out schnooks who filed their returns 15 minutes or even a couple of days late.
For practical purposes, if you don’t owe money or the IRS owes you, you don’t have to file a return at all. All penalties and interest are figured as a percentage of what you owe. If you owe nothing the penalty for late filing is zero. No criminal sanctions, either. The IRS folks are pretty candid about admitting this too, no doubt on the theory that only a moron would fail to file if he had money coming back.
They do of course prefer that nonowers file, since the only way they can be sure you don’t owe anything is to see your return. But if a nonfiling nonower decides to get right with the government and brings in a bunch of back returns, no prob, glad to have you back.
Just one thing. If you had money coming on a return you filed more than three years late, tough luck, Charlie. You just helped retire a little piece of the national debt.
If you do owe money, filing late (or never) isn’t such a hot idea. Penalties, interest, and maybe even criminal sanctions apply.
Being a day or two late is no big deal, but the IRS figures a week or two is enough for even the most disorganized postal districts to get the mail where it’s supposed to go. Then things start getting ugly. If you’re late and you owe, the P&I clock begins ticking as of the postmark date.
But let’s suppose it’s April 15 and suddenly you realize: cripes, I owe two grand and I don’t have enough cash to get cheese on my Whopper. What do I do? Assuming the criminal life doesn’t appeal to you, file and don’t pay. The penalty for not filing is a stiff 5 percent of the amount owed per month (25 percent max), whereas the penalty for not paying is only 0.5 percent per month.
Just keep the amount you owe to less than $10,000. If you do, the IRS puts you on an automatic installment plan. If it’s more, you have to submit so much paperwork that the criminal life might start to look pretty good.
— Cecil Adams
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A Second Opinion: By the folks at Learnvest.com
What Happens If You File Taxes a Day Late?
Minda Zetlin (Posted on Apr 16, 2010)
Crap. You missed the April 15th deadline for filing your taxes. What happens if you send in your return today, a day late?
Better Late Than Never.
And, less late is better than more late. So, go ahead and file your return today, or as soon as you can. If you’re having trouble completing that return and make $57,000 or less per year, you can get free filing software.
No Punishment, If You’re Getting a Refund.
If the IRS owes you money, the only consequence of filing late is that you’ll get your refund late. In fact, you can still get a refund if you file up to three years late. (Please note, we DON’T recommend you try this!)
But If You Owe Taxes, You’ll Also Owe Penalty And Interest.
The magnitude depends on how much you owe Uncle Sam. The penalty for filing late is 5% of whatever you owe per month—a portion of a month counts as an entire month—that you’re late. So yes, one day late counts as an entire month. In addition, you’ll have to pay interest at a rate that varies with the market (though it’s probably lower than a typical credit card).
Will They Really Notice?
After all, they’re literally getting millions of tax returns this week. Will they really notice which ones are postmarked April 16th instead of 15th? All we can tell you is that they say that they’ll notice, and that they hang on to the envelope that your tax return arrives in for this very reason. So, don’t be surprised if you get an IRS bill for a relatively small sum because of your one day of lateness.
Next year, if you’re going to be late (even by a day!), make sure to file for an automatic extension.
And now, for a third opinion, by the folks at fivecentnickel.com—
What Happens if You File Your Taxes Late?
With just a few days left before taxes are due, I thought it would be worth talking about what happens if you miss the deadline and wind up filing late. The short answer is that you run the risk of penalties and interest, and failing to file on time is much worse than failing to pay on time. For more details, read on…
Enforcing the filing deadline
For starters, rumor has it that the IRS doesn’t bother checking postmarks for returns that are just a couple days late, so you might be okay. The problem is that there is a lot of variation inherent in the US Postal Service, and they’ll also be receiving millions (and millions) of last minute returns. Thus, as long as your return is close to being on time, they might not even notice.
I can’t speak for the actual filing deadline, as I’ve never rolled the dice on that one, but I’ve certainly found this to be true for quarterly tax deadlines. On more than one occasion in the past, I’ve mailed our quarterly payments a day or two late and I’ve never heard back from the IRS about it. It might be that they didn’t notice, or perhaps they realized that it was more costly to print and mail a notice than it was to just let it slide.
But if you do file late – and the IRS catches you – the interest and penalties will accrue from the actual due date through the postmark date. So… What if you file (or pay) late, and you get caught?
Penalties for filing and/or paying late
As it turns out, the penalty for “failure to file” is much steeper than the penalty for a late payment. Thus, if you can’t afford the amount due, you should still file your return (or request a filing extension) in a timely manner and then explore alternative payment options.
To be a bit more specific, the penalty for late payment is typically 0.5% of your unpaid taxes per month (or portion thereof) after the deadline that your taxes go unpaid. This penalty can wind up being as much as 25% of your total amount due, so don’t let it slide any longer than absolutely necessary.
In contrast, the penalty for filing your return late is typically a whopping 5% of your unpaid taxes per month (or portion thereof) after the deadline that they receive your return, topping out at 25%. And if you file more than 60 days late, the minimumpenalty is the smaller of $135 or 100% of the taxes that you owe.
Keep in mind that, as long as you request an extension and pay in at least 90% of your actual tax liability by the original due date (including withholding and estimated payments), you’ll avoid any underpayment penalties as long as the balance if paid no later than the extended due date.
(More on penalties from IRS.gov: link)
What if you’re expecting a refund?
If you’re expecting a refund there’s actually no need to file on time. As I’ve detailed above, all penalties and interest are based on your unpaid balance. If you don’t owe a dime, the penalties will add up to a whopping zero dollars. Thus, as I’ve detailed elsewhere, if you’re expecting a refund, you may not have to file on time.
Of course, if the IRS owes you money, you should do whatever you can to collect it as quickly as possible. And keep in mind that the IRS statute of limitations runs out after three years so, whatever you do, make sure you claim your refund within that timeframe or you’ll forfeit the money that you are due.
P.S. If you need more time to finish your taxes, don’t forget to request a state income tax filing extension in addition to your federal extension.
