Failing to File Is No Solution to Tax Problems

WASHINGTON - The Internal Revenue Service warned people not to be fooled into thinking that failing to file a return can be the answer to their tax dilemma. Nonfilers who owe taxes face higher penalties, while those who fail to file for refunds could lose their right to the money.

The penalty for failing to file -- five percent per month of the tax due -- is ten times the late payment penalty : one-half percent per month. And all overdue taxes are subject to interest charges -- currently eight percent per year, compounded daily. A person who fails to claim a refund within three years of the due date of the tax return loses the right to the refund.

IRS experience shows that many nonfilers are single people with low to middle incomes. They may lack a W-2 form or an interest statement needed to complete the return. Or they owe a balance they can't pay. Or they skipped filing for one or more years and now they're afraid of contacting the IRS. Those who would get refunds are usually wage earners. Self-employed individuals -- who don't have taxes withheld -- are more likely to have a balance due. However it happened, IRS wants to help nonfilers settle their tax problems.

IRS offers taxpayer assistance through walk-in offices, a toll-free information number -- 1-800-829-1040 -- and trained volunteers. For those missing a W-2 form, there's a substitute form to reconstruct income and withholding. An installment plan may be set up for those who can't pay the full amount owed.

The most important thing, according to the IRS, is to keep fear from letting this year's deadline slip by. By taking action now, those who might otherwise become nonfilers will keep their problems from multiplying on April 15th.

As of March 27, the IRS had received over 62 million tax returns and approved 42 million refunds, worth $41 billion. At $973, the average refund is up 8.3 percent over last year.

Previous | Next

1992 IRS News Releases | News Releases Main | Home