If you don't file your tax return by the due date and assuming that you money,...

If you don't file your tax return by the due date and assuming that you money, you would be hit with two penalties: failure to file and failure to pay.

The failure-to-file penalty is equal to 5% of the taxes you owe for each part of a month you're late, up to a maximum of 25% of unpaid taxes. Therefore, this penalty reaches its maximum after a 5-month filing delay. For example, if you're two days late with filing and you owe $1,000 in taxes, you could be hit with a $50 penalty. If you're more than 6 months late, the maximum penalty is $250.

The failure-to-pay penalty is 0.5% of unpaid taxes for each part of a month you're late, up to 25% of unpaid taxes due. This penalty applies even if you file on time but don't pay what you owe. This penalty reaches its maximum after a 50-month delay in payment. For example, if you're two days late with paying and you owe $1,000 in taxes, you could be hit with a $5 penalty (10 times less than the failure to file penalty).

A quick glance at these penalties shows why it's so important that you file your taxes on time, even if you can't pay on time. In most cases, the failure-to-file penalty is 10 times greater than the failure-to-pay penalty.

Question:

Most people believe that the Government wants your tax dollars, whereas it seems that it wants your tax return much more than your money. Why is that?

(NOTE: Your reply should be at least 250 words in length)

Expert Solution


It is correct that the Government wants your tax return should be filed timely much more than your money in the
form of tax dollars . The Government want, the citizon of a country disclose their income correctly before due date
of filling of return. It is unfair to say that government focus on tax collection in priority. The Government know give
the priority on filing of return instead payment of taxes. If returns got filed timely and fairly there will be defaultly
enough tax payment.

The Government also know once tax liability declaired in return, assessee definitely will pay immediately or
later with interest. That’s why late filling fees " The failure to file penality" is normally being higher rather than
interest/penalty for late payment of taxes "The failure to pay penalty". It is seems in some country like india
around 05-10 % of total population file their return. So the Government staff's more time waste on assessment,
search and survey process to investigate undisclosed income/escaped income. If more people file their return
on time then time and cost both will be saved and by default collection of taxes will get increased.

So, the Government more focus and believe in the concept of voluntry filing of tax return as explained above
instead aggressive policy for collection of taxes.

ekkarill92 answered 2 years ago

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