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What Can Happen If Taxes Are Filed Late

Posted by Pietro E. Canestrelli | May 03, 2023 | 0 Comments

Small to medium-sized business owners must submit tax returns on time to avoid penalties and guarantee legal compliance. Even with this, some firms could miss the deadline for submitting their tax returns due to various factors, including financial difficulties or ignorance. We will go over the repercussions of paying taxes late, the related fines, and the significance of getting assistance from a tax lawyer, specifically Pietro Canestrelli, a well-known tax conflict lawyer with a law office in San Diego and Temecula, CA.

The Consequences of Filing Late Taxes

Filing late taxes can have severe consequences that can negatively impact your business in the long run. The Internal Revenue Service (IRS) imposes penalties for late filing and payment and charges interest on unpaid taxes. Some of the consequences of filing delinquent taxes are:

  1. Financial burden: Late filing can result in hefty penalties and interest charges that can strain your business financially.
  1. Legal action: If you ignore IRS notices and fail to pay taxes, the agency can take legal action against your business, including seizing assets or levying your bank accounts.
  1. Damage to your reputation: Late filing can lead to negative publicity, damaging your business's reputation. It may also cause distrust among your clients and creditors, making it difficult to do business in the future.

Understanding Penalties for Late Filing

The failure-to-file and the failure-to-pay penalties are two different sorts of penalties that the IRS levies for late filing. Here are some specifics regarding these fines:

Failure-to-file fine: For each month or portion of your late tax return, you will be fined 5% of the outstanding taxes. The penalty might be as much as 25% of the delinquent taxes.

Failure to pay a tax bill on time will result in a 0.5% failure-to-pay penalty for each month or portion of the tax due. Moreover, the penalty may be as much as 25% of the delinquent taxes.

The failure-to-file penalty is more severe than the failure-to-pay penalty, so even if you cannot pay your taxes on time, you should still file your tax returns to avoid a more significant fine.


The Importance of Seeking Help from a Tax Attorney

  1. Legal advice: Pietro Canestrelli can provide legal advice and guidance on tax matters, including filing late taxes and resolving tax disputes with the IRS.
  1. Representation: If your business faces legal action from the IRS, Pietro Canestrelli can represent you in court and negotiate with the agency.
  1. Tax planning: Pietro Canestrelli can help you plan and manage your taxes to avoid late filing and other tax-related issues.

By seeking Help from a tax attorney, you can avoid the penalties associated with late filing and ensure compliance with the law.

Statistics on Late Tax Filing

According to the IRS, as of 2023, the number of taxpayers who file their tax returns late each year continues to be significant. In 2022, approximately 17% of taxpayers filed their returns after the April 15th deadline. Furthermore, the IRS reported that the number of taxpayers who filed late increased during the COVID-19 pandemic. Taxpayers must file their returns on time with the potential for penalties, interest, and legal action.

Options for Business Owners with Late Taxes

Several options are available if you are a small to medium-sized business owner with delinquent taxes. Here are a few.

  1. Payment Plans

You can ask the IRS for a payment plan if you cannot fully pay your taxes. You can choose this option if you want to spend your taxes in installments over time. But, you must fulfill specific criteria to be eligible for a payment plan, and interest and penalties will still be charged.

  1. Offer in Compromise

An agreement between a taxpayer and the IRS, known as an "offer in compromise," resolves the taxpayer's tax responsibilities for less than the total amount owing. You must show that you cannot fully pay your tax burden and that the settlement will benefit you and the IRS to be eligible for an offer in compromise.

  1. Penalty Abatement

You may be eligible for penalty abatement if you have a reasonable cause for failing to file or pay your taxes on time. This option allows you to request that the IRS reduce or eliminate penalties and interest on your tax debt. However, the IRS will require documentation and evidence to support your claim.

Small to medium-sized firms must submit their taxes on time to avoid penalties and guarantee legal compliance. Late filing can have severe repercussions like financial strain, legal trouble, and reputational harm. Obtaining assistance from a tax lawyer like Pietro Canestrelli, who can offer legal counsel, advocacy, and tax planning services, is crucial to prevent severe repercussions. By staying informed and taking action, you can ensure the success and growth of your business while remaining compliant with the law. Contact the Law Office of Pietro Canesrelli to learn more (951) 319-7674.

About the Author

Pietro E. Canestrelli

J.D. LL.M Taxation Certified Bar Tax Specialist Founder & CEO


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Law Office of Pietro Canestrelli, A Tax Controversy Boutique, APC
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(951) 319-7674
Law Office of Pietro Canestrelli, A Tax Controversy Boutique, APC
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San Diego, CA 92128
(858) 433-0922
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