Consequences of Missing Your Tax Extension Deadline

If the IRS granted you the popular 6-month extension, but you then failed to meet that tax extension deadline by October 15, interest, penalties or fines will result on the balance due.

Interest and Penalties

The interest on overdue tax compounds daily from the due date until the date you pay. As the IRS website explains, "The interest rate is the federal short-term rate plus 3 percent."

There are two types of penalties, one for failing to pay and one for failing to file. The failure-to-pay penalty consists of 0.5 percent of your unpaid taxes for each month, or part of a month, the tax is unpaid after the due date. This penalty cannot exceed 25 percent of the unpaid tax. If you can show the IRS reasonable cause for not paying the tax on time, you will not have to pay it.

The failure-to-file penalty is assessed at 5 percent of the tax not paid by the due date for each month, or portion of a month, that your return is late. This penalty also cannot exceed 25 percent of your tax, and it will be reduced by the failure-to-pay penalty when both of these penalties apply. If you can show the IRS reasonable cause for not filing in a timely manner, you will not have to pay this penalty.

Here Is What You Can Do

Send an immediate payment. More interest and penalty charges will accrue if you continue to wait.

File your tax return. You cannot file for another extension, and your tax return must be completed as soon as possible.

Always follow up with the IRS (and your state department) to be certain the funds match the correct tax documents. Check your bank accounts for withdrawal and always keep canceled checks.

If You Can’t Pay

You will still need to file your tax return because it tells the IRS that you know of the situation and that you wish to resolve it. Once you are in communication with the IRS, you can set up a payment plan to pay your tax bill.

During this time, the IRS will continue to assess your fees and penalties, so you should pay as much as you can as soon as you are able to do so. The IRS can file a "Notice of Federal Tax Lien" if you do not pay your tax bill, and this can damage your credit rating, not to mention bringing possible jail time.

There are also penalties for underpaying your taxes. Penalties can run from small fines to criminal charges. These charges include civil or criminal fraud, frivolous return, or negligence, and will range from hefty fines to time spent in jail.
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