What happens if you miss the tax deadline?

First, the good news: You can still file. The sooner you do, the more you’ll save in penalties. Furthermore, if you missed the deadline but the IRS owes you a refund, there is no penalty — you have up to three years to claim your refund.

Now the bad news: If you owe the government money, there will be consequences. One of the most immediate, of course, is the potential for incurring penalties and interest. Exactly how much you are charged will vary depending on factors such as how late you are, how much you owe, the type of filing, and the jurisdiction, but they can add up quickly over time.

For example, if you miss the tax filing deadline and owe taxes, you can be charged a failure-to-file penalty of 5% per month, up to a maximum of 25% of the total tax owed. In addition, there is a failure-to-pay penalty of 0.5% of the unpaid tax per month, up to a maximum of 25%. Interest will also accrue on any unpaid taxes at a rate that the IRS sets.

Other types of filings may have different penalty structures, but they can also be significant. For example, a late annual report filing for a corporation in some states can result in fines of hundreds or even thousands of dollars.

Loss of Good Standing or License

Another potential consequence of missing a filing deadline is the loss of good standing or license. This can be true for businesses and individuals alike. For example, if a corporation fails to file its annual report on time, it may be deemed “not in good standing” by the state. This can have negative consequences, such as making it difficult to obtain financing or enter into contracts.

Similarly, individuals who miss a professional license renewal deadline may be able to practice their profession once they become current on their licensing requirements. This can result in lost income and a damaged reputation.

Audits and Investigations

Missing a filing deadline can also trigger audits and investigations — which are never a pleasant experience.

For example, if you miss the tax filing deadline, the IRS may decide to audit your tax return to ensure that you have reported all of your income and deductions accurately. This can be a time-consuming, stressful, and confusing process, even if you ultimately come out of it unscathed. (We’ve gone into greater depth on what to do if you are being audited previously on this blog.)

Other types of filings may also trigger audits or investigations. For example, suppose you miss the deadline for filing financial statements for a private fund. In that case, the Securities and Exchange Commission (SEC) may decide to investigate the fund for potential securities law violations.

What do you do if your tax return is late?

If you haven’t filed your tax return, the best first step, to put it succinctly, is to do so — immediately or as soon as possible. While you may still face penalties and interest, the longer you wait, the worse the consequences are likely to be.

If you cannot file the paperwork, consider hiring a professional. You can also negotiate with the agency that oversees the filing to see if they will waive or reduce the penalties and interest. This is more likely to be successful if you have a good reason for missing the deadline, such as a medical emergency or a natural disaster.

If you cannot pay your taxes in full when you file your return, you can set up a payment plan with the IRS. This will allow you to pay your taxes over time rather than all at once. However, you will still be charged interest on the unpaid balance.

Here are some further tips that may help:

  • If a refund is due, there is no penalty for filing a late return after the tax deadline. If you didn’t file and owe tax, file a return as soon as possible and pay as much as possible to reduce penalties and interest.
  • For those who qualify, IRS Free File is still available on IRS.gov through October 15 to prepare and file returns electronically.
  • If you don’t qualify for IRS Free File, you can use Free File Fillable Forms to e-file. This option uses electronic versions of IRS paper forms. It does some of the math and works best for those comfortable doing their taxes.
  • You can get fast answers about your refund by using the Where’s My Refund? tool available on IRS.gov and through the IRS2Go mobile app. All you need is your Social Security number, tax filing status, and your refund amount. Where’s My Refund? is updated no more than once every 24 hours, usually overnight, so you don’t need to check the status more often.
  • If you owe taxes, you can view your balance, pay with IRS Direct Pay, by debit or credit card or apply online for a payment plan, including an installment agreement. Before accessing your tax account online, you must authenticate your identity through the Secure Access Several other electronic payment options are available on IRS.gov/payments. They are secure and easy to use. If you pay electronically, you’ll receive immediate confirmation when you submit your payment. Also, with Direct Pay and EFTPS, you can opt-in to receive email notifications about your payments.
  • If you need more time to pay your taxes, you can apply for an installment agreement with the IRS. The best way to apply is to use the IRS Online Payment Agreement tool. Once you complete the online process, you’ll receive immediate notification of whether your agreement is approved. No matter how or when you file, you should keep a copy of your tax return and all supporting documents.

No matter how or when you file, you should keep a copy of your tax return and all supporting documents.

Taxpayer Bill of Rights

Taxpayers have fundamental rights under the law that protect them when interacting with the IRS. The Taxpayer Bill of Rights presents these rights in 10 categories. IRS Publication 1, Your Rights as a Taxpayer PDF, highlights these rights and the agency’s obligation to protect them.

In closing…

While missing the deadline to file your tax returns can be a costly mistake, there are options available to help you minimize the penalties and interest you will owe. You can limit the damage and get back on track with your tax obligations by taking action as soon as possible.

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