Stephen Merritt, CPA, PC | Certified Public Accountants | (757) 420-5778
233 Business Park Drive, Suite 104, Virginia Beach, VA 23462
- Failure to file
- Happenings at SMCPA
Failure to File
Failure to File: COVID-19 Update
Due to COVID-19, the IRS extended the tax return filing and payment deadline to July 15, 2020. If you are unable to file your return by this date, you may request an extension which will give you until October 15, 2020 to submit your tax return. However, an extension only gives you extra time to file your tax return; your payment is still due no later than July 15, 2020.
When a taxpayer has not filed a tax return by the extension deadline of October 15th, the IRS will gather all of the tax documents that have been transmitted to them and create a substitute return. If their data shows that you are owed a refund, nothing further will be done. If the data shows that you owe money, the IRS will begin sending out collection letters.
Overpayment of Taxes
If you qualify for a refund and wait more than 3 years to file your return, the IRS will take that refund away because the statute of limitations will have expired. Don’t expect them to send you a reminder letter!
Penalties Assessed If You Owe
There is interest due on taxes you owe, but that’s not the biggest penalty. For every month that your tax return remains unfiled, a five percent failure-to-file penalty applies, up to 25 percent of the tax due.
For example, let’s say you owe $1000. It could cost you a penalty of $250 per month for not filing, but only a $5 penalty for not paying. Don’t forget that in addition to the penalties listed above, the IRS will continue to charge interest on any unpaid balance.
Increased Audit Risk
In addition to the penalties and interest you are charged when you don’t file a timely return, you also increase your chances of being audited. When you file on time, you have a three percent chance of an audit. If you don’t file on time, your chance of being audited increases to 50 percent.
The general rule is to file by the extension due date since the consequences are harsher for not filing than not paying the tax due. However, be proactive to pay any tax due by the deadline, not the extension deadline
Coronavirus Disease (COVID-19)
Stephen Merritt, CPA, P.C. understands the challenge the impact COVID-19 has on our community.
Our office will continue with regular business hours; however due to COVID-19 there are no client meetings. We have a handy system of passing the box thru the door, as well as following sanitary procedures.
Hours of Operation: Monday- Thursday 8:00 am till 5:00 pm.
Office is closed on Fridays from May 1- Sept. 4
Tax documents may be mailed, FAXed or emailed.
Final Returns will be mailed out.
As always, please call, we are happy to assist.
Stay safe and healthy.
Happenings at SMCPA:
Louis enjoying some sun!