Failure to file your federal income tax return could result in serious financial penalties. You might even find yourself criminally charged with 'failure to file a tax return.' The Internal Revenue Service, or IRS (I-R-S), may make such a charge up to six years from the date you should have filed the return. Does this mean that after six years the IRS can't take action against you if you don't file? No, the six-year limit applies only to the IRS' ability to file criminal charges; there are no time restrictions on when the IRS can audit, collect taxes, or impose civil penalties. You should file an income tax return even if you can't afford to pay what you owe. The penalty for filing but underpaying your taxes is much less that not filing at all. In fact, the penalty on underpaid but filed taxes is one-half of a percent, but the penalty on taxes that weren't even filed is five percent of the tax due per month, up to 25 percent. You should still file a return if you can't afford to pay the taxes due; you may be able to enter into an Installment Agreement with the IRS to pay over time. You can also request an extension from the IRS to give you more time to file and pay your taxes. Though you have more time to pay, the balance of the taxes you owe is subject to interest and penalties. Failure to file a federal income tax return if you're required to do so can lead to fines and/or criminal charges, so it's usually in your best interest to file. If you're not sure whether you're required to file, consult a tax professional.
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