The Common Law

Tax Deadline Hangovers

The April 15 tax deadline has come and gone, but tax questions still remain. Here are short answers to common questions that remain after the April 15 deadline.

I didn't file a return (or anything else) with the IRS by the April 15 deadline. Should I file late? What are the consequences if I don't file at all?

If you failed to submit a return by the deadline, the Internal Revenue Service suggests that you immediately submit all required returns that are past due to avoid additional penalties and interest. Whether paying with a timely filed tax return or filing late and paying late after receiving a bill from the IRS, the IRS strongly encourages taxpayers to pay the taxes they owe in full. If taxes are not paid and no effort is made to pay them, the IRS can ask a taxpayer to take action to pay the taxes, such as selling or mortgaging any assets owned or getting a loan. If effort is still not made to pay the bill or make other payment arrangements, the IRS could also take more serious enforced-collection action. This includes levying bank accounts, wages, or other income or taking other assets. For example, a Notice of Federal Tax Lien could be filed that may have a detrimental effect on a taxpayer's credit standing. Check out the IRS website for more information on filing a late return (www.irs.gov - "Haven't Filed an Income Tax Return? Here's What to Do").

How long should I hold on to the documents that support my tax return?

The IRS recommends that documents that support an individual tax return should be kept for at least three years. A more cautious approach is to keep the documents for six years, which is the limit the IRS can audit someone who it suspects has underreported income by 25% or more. The IRS suggests other hold periods for specific situations. Check out the IRS website to learn more (www.irs.gov – "How Long Should I Keep Records?").