If you’ve missed the official deadline to pay your taxes, don’t stress. Getting back on track with your taxes is, in many cases, simpler than most people think.
Whether you owe individual taxes or taxes for your small business, the easiest solution is to pay your taxes as soon as you can. At Milikowsky Tax Law, we realize it’s not always that simple — and we’re here to help you navigate your late taxes.
When creating a plan to pay taxes owed after missing a deadline, it’s important to consider the ramifications of what might happen if you don’t meet your payment obligations. In addition to interest building up on what you owe, your social security benefits, ability to secure a loan, and tax refund can be impacted.
Read on to learn what to do to start resolving your tax debt as soon as you can.
Before we discuss what to do if you’ve missed a deadline, make sure you know for certain when your taxes are due.
For businesses in California, the deadline to file your state taxes will depend on when your fiscal year begins. Most business returns are due by the 15th day of the third month of a company’s fiscal year — so for example, if your fiscal year begins on January 1, your California state taxes will be due on March 15. Dates for tax extensions vary depending on the business. Check the state’s tax website for more details.
What to Do If You Missed the Due Date
If you’ve missed your deadline, it’s important to take action right away to get back on track. As mentioned earlier, the best thing you can do is to pay your taxes as soon as you can. Before you do that, it’s important to take a few basic steps.First, gather all of your tax and income documents. Find your past W-2s, W-9s, 1099s, or other tax statements and filings. The IRS or your employer will be able to provide you with copies of any missing statements.
Next, meet with an experienced tax attorney to discuss your repayment options. Though you may be eager to pay back your taxes as soon as possible, it benefits you to take the time to go over your tax situation with an attorney, who can offer counsel and help fill any missing gaps in your documentation. A tax attorney will advocate for you to the IRS, in order to help secure your best repayment plan.
There are a few different options for settling your tax debt, depending on your situation. If you don’t want to (or can’t afford to) pay your entire amount owed all at once, the IRS allows for payment arrangements for a maximum of 72 months and $50,000 or less owed. This can be done through the IRS Form 9465. If you owe less than $10,000, your request will likely be approved automatically.
If you owe more than you can pay, you may qualify for an offer in compromise, which allows the taxpayer to settle with the IRS by paying less than what is due. The IRS will look at your ability to pay, income, taxes owed, and the value of your assets to determine whether you qualify and what your settlement and payments will be.
For more challenging situations, you might consider the IRS’ “Currently Not Collectible” program — if you qualify for this, the IRS will wait one year before coming to collect your debt. This can give you and your tax attorney more time to make a case to file an appeal. In worst-case scenarios, bankruptcy may be an option for you; be sure to discuss with your tax attorney to determine whether you qualify.
If you do not pay or fail to meet payment obligations you agreed on, the IRS will charge you a failure-to-pay penalty and interest on your taxes owed. This will only drive up your total amount owed, potentially by a significant amount.
Your delinquent tax status will also be reported to financial institutions, making them less likely to loan you cash for a home, car, or your business. In extreme cases, liens and levies can be filed against you.
For those who are self-employed, it may also impact your Social Security benefits. If you fail to pay your taxes, your self-employment income will not be reported to the Social Security Administration, meaning you will not receive any money toward retirement or disability benefits.
If you fail to pay your business’ taxes, you may have your seller’s permit revoked, making illegal to operate your business — if you were to continue operating your business without this permit, you’d face a fine of as much as $5,000 and up to a year in prison.
The penalties can be serious, especially for a business owner, but you can minimize your risks by working with a legal professional who can advocate on your behalf. It’s always your best choice to consult a dedicated tax attorney when you’ve missed your tax deadline, to help you make your case to the IRS and get the best possible results for resolving your debts.