Paying taxes isn't voluntary. That's why there's payroll withholding to take the money out of our wages before we get our checks.
Don't pay your taxes or file late and you'll be hit with a tax penalty.
But the Internal Revenue Service does rely on taxpayers to voluntarily file a return every year and if enough tax hasn't been withheld, pay any added amount that's due.
The process is a bit different for self-employed folks. Here the IRS expects estimated tax payments (generally four a year via Form 1040-ES) in addition to an annual Form 1040.
Good tax citizenship, however, can only go so far. So in case we aren't quite as eager to voluntarily fulfill our tax responsibilities as Uncle Sam would like, he has the option to whack us with a penalty.
And now, late filers will pay even more.
Trade and tax penalties: On Wednesday (Feb. 24), the president signed into law the Trade Facilitation and Trade Enforcement Act of 2015, also referred to as the customs bill.
The measure included a couple of tax provisions, most notably a permanent moratorium on state and local taxation of Internet access.
But also in the trade bill was a hike in the late-filing penalty.
Previously, if you filed a return more than 60 days after the due date (which is April 18 this year) or extended due date (also later, Oct. 17, since the 15th is on a Saturday), you would have faced a penalty of the lesser of $135 or 100 percent of your unpaid tax.
But under a provision in the newly-enacted trade law, now if you send in your Form 1040 (and additional forms and schedules) more than two months after the return is due, you'll be slapped with a penalty of $205 or 100 percent of your due tax, whichever amount is smaller.
I don't know about all y'all, but I sure have a lot better ways to spend $70 than sending it to the U.S. Treasury.
You also might find these items of interest:
- 4 cents x 4 years = $202.35 tax bill
- 3 ways to navigate estimated tax penalty safe harbors
- Tax vs. penalty battle also underway at lower governmental levels
Correction: This post originally misstated the effective date of the increased late-filing penalty. It applies to returns required to be filed in 2016 and beyond.
