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File Your Tax Return Or Get An Extension?

By Cathy Moran

spotlight

Filing a tax return does not focus a spotlight on you.

Really.

I regularly see clients who have not filed returns because they have some issue with the IRS.

They either have taxes that will be owed with the unfiled return, or taxes owed from earlier periods.

They think they are avoiding trouble by not filing.

Not so.

It seems that it takes weeks, or even months for returns to get entered in the system.

I have seen no evidence that collection action is triggered by filing a return even with a balance due.

Tax penalties coming and going

The IRS levies two separate penalties for non filers: a penalty for not filing the return and a separate penalty for not paying the tax.

Perhaps you can’t pay all you owe with the return, but why incur an avoidable penalty for not filing a timely return?

Tax penalties are not dischargeable in Chapter 7 until they are more than three years old. Contain the damage: file on time.

Image courtesy of Johnarobb.

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  • Credit card “overspending” parallels housing crisisCredit card “overspending” parallels housing crisis
  • The Struggle To Surrender Underwater Real EstateThe Struggle To Surrender Underwater Real Estate

Filed Under: Taxes

About Cathy Moran

I'm a veteran bankruptcy lawyer and consumer advocate in California's Silicon Valley. I write, teach, and speak in the hopes of expanding understanding of how bankruptcy can make life better in a family's future.

Comments

  1. Nickolas Seaver says

    January 14, 2012 at 12:36 pm

    Enjoyed every bit of your blog post.Really thank you! Will read on…

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About The Soapbox

You’ve arrived at the Bankruptcy Soapbox, a resource of bankruptcy information and consumer law.

Soapbox is a companion site to Bankruptcy in Brief, where I try to be largely explanatory and even handed (Note I said “try”).

Here, I allow myself to tell stories and express strong opinions. We dig deeper into how to consider bankruptcy and navigate a bankruptcy case.

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