Photo: Flickr / stevendepolo
If you’re trying to outsmart the IRS and do something that’s not exactly legal, you may want to think twice lest you end up with penalties.Don’t take the chance and always walk the straight and narrow, because it’ll come back to bite you. The IRS lists some of the consequences that are in store for you if you are careless with your taxes:
Filing late: If you don’t file by the deadline, you might be faced with a failure-to-file penalty. “The penalty for filing late is usually five per cent of the unpaid taxes for each month or part of a month that a return is late. This penalty will not exceed 25 per cent of your unpaid taxes.”
Filing over 60 days late: “If you file your return more than 60 days after the due date or extended due date, the minimum penalty is the smaller of $135 or 100 per cent of the unpaid tax.”
Fraud: “If your failure to file is due to fraud, the penalty is 15 per cent for each month or part of a month that your return is late, up to a maximum of 75 per cent.”
Fraud due to underpayment: “If there is any underpayment of tax on your return due to fraud, a penalty of 75 per cent of the underpayment due to fraud will be added to your tax.”
Exceptions: “You will not have to pay the penalty if you show that you failed to file on time because of reasonable cause and not because of willful neglect.”
Civil penalties: If you do not file your return and pay your tax by the due date, you may have to pay a penalty. A couple of other circumstances in which you have to pay a penalty include if you substantially understate your tax, understate a reportable transaction, file an erroneous claim for refund or credit, file a frivolous tax submission, or fail to supply your Social Security number or individual taxpayer identification number. If you provide fraudulent information on your return, you may have to pay a civil fraud penalty.
Criminal penalties: You may be subject to criminal prosecution for actions like tax evasion, willful failure to file a return, supply information, or pay any tax due, fraud and false statements, and preparing and filing a fraudulent return.
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