Most of us have missed a deadline once (ok, maybe twice) in our life. Maybe we turned a paper or school project in late. Maybe we missed a great deal on plane tickets by this much, maybe we just plum forgot something. For example, to pay our taxes. Maybe that deadline we forgot was (*gulp*) filing our past year tax returns. Now what do you do?
Fortunately, past year tax returns can be filed at any time during the year.
Really. Here’s why:
Past year tax returns are an important source of revenue for the IRS. Part of this is because the Internal Revenue Service make a lot of money off tax liens and other fees. A part of this is because these tax debts can accrue interest for years–making that much money. The longer you have fees to pay, the longer you can accumulate debt–but only if you have the option to pay at any time.
Of course, there could be an easier way to handle past year tax returns: flat fees. Simply charge people who still have past taxes to handle based on the amount of time they haven’t paid them. This would keep the debt from getting to the astronomical proportions it sometimes does, which would keep more Americans out of trouble with the IRS.
This makes a lot of sense, but it also takes a lot of money away from the IRS. The unworkable reason behind this is: the less people have to fear their past year tax return, the less likely they are to pay. However, in my experience, people who fear something are less likely to do it, not more. By allowing tax debt to get so high, the government is actually scaring away some people from paying it, even as they are theoretically racking up fines.
To put it bluntly, there is a confusion with the way the IRS is applying accounting principles to their practice but we have to do our best to stay in compliance with the overcomplicated US tax laws.
With flat fees people would be more likely to pay their tax debt, as they would have less to fear. Rather than stressing about all the money they owe, they could relax, pay off their reasonable fee, and be done with it. This is especially important for the government because many people who have past year tax returns are actually owed money. With flat fees, the government would encourage more people to actually pay their tax debt, thus gaining some percentage back (while still paying off all the refunds from those past year tax returns that’d be coming in).
So yes, you can file past year tax returns at any time. The debt involved in back taxes doesn’t have a time limit–but refunds do. So it’s in your best interest to file any old taxes as quickly as you can, so that the government doesn’t walk off with more of you cash!
PriorTax can help you resolve your tax issues.
Photo via Tambako the Jaguar on Flickr.