The Consequences of Missing the Tax Deadline

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April 2, 2023

Nidhi Jain

Every year, the IRS (Internal Revenue Service) sends out reminders regarding the deadline to file taxes through various channels. Tax issues and related problems can pile up quickly if you ignore this deadline or miss it.

There are several consequences for missing taxes because the IRS knows how much an individual has earned in a year even if they don’t report their income. Let’s take a look at some of the major consequences here.

1. Penalties

Filing after 60 days of the tax deadline could result in potential penalties going up to 25 percent of the amount owed as your tax. Applying for an extension doesn’t extend the tax due date as well.

If the IRS suspects or identifies any fraudulent activity on an individual or a business’ end, they can increase the penalties up to 75 percent of the amount owed.

2. Criminal Charges

Failing to file your taxes within the due date is classified as a federal crime and is punishable by a misdemeanor or felony. If an individual or a business has missed the deadline intentionally to evade tax, they can be charged with criminal tax violation, which could result in jail time.

3. Loss of Entitlement to Refunds

When you file taxes on time, you’re entitled to some refunds. Claiming refunds policy usually applies for three years starting from the due date of filing. If you constantly miss deadlines and file late, you can lose your entitlement to unclaimed refunds or pay the penalty for it.

4. Tax Return Preparation by the IRS

The IRS receives information from third-party sources. They know how much an individual or business has earned in a particular year and can prepare your tax returns on your behalf. However, you or your business will miss out on credits, deductions, exemptions, and more.

Keeping in mind that the statute of tax collection and assessment starts only when a return is filed, the IRS can collect and assess your unpaid tax returns several years later.

Missing your tax deadline has dire consequences, so individuals and businesses should work with a professional beforehand to file their taxes promptly.

Nidhi Jain is a certified public accountant cpa in Bay Area. She runs her tax and accounting firm that helps individuals and business tax filing Bay Area. We also offer payroll, bookkeeping, and LLC formation for businesses.

Call us now for further details regarding our services.

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Reconcile Every Financial Account

Compare each bank, credit card, loan, and payment processor balance with the bookkeeping system. Investigate missing deposits, duplicate charges, fees, returned payments, and transfers.

Complete this task before closing the month. Otherwise, errors can carry into future reports and make taxable profit look higher or lower than it is.

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Software subscriptions
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Review Receivables and Payables

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Check Tax Accounts

Confirm wages, employer taxes, benefits, reimbursements, and contractor payments.

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Run Key Financial Reports

Review the profit and loss statement, balance sheet, and cash flow report. Compare the current month with the prior month, budget, and same period last year.

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Create a Monthly Closing Checklist

Use the same steps every month and assign a completion date. Consistency reduces rushed corrections during filing season.

Keep Your Books Tax-Ready With Nidhi Jain CPA

Nidhi Jain CPA provides business bookkeeping support for owners who need organized records and clear financial reports. Our bookkeeping and accounting services include reconciliations, expense reviews, and monthly reporting. Work with our certified public accountant who can help keep your records ready for tax filing all year. Contact us now.

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Ask how often bank, credit card, loan, and payment processor accounts should be reconciled. Also ask who will review uncategorized transactions, owner payments, and unpaid invoices.

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What Should I Prepare for Next?

Ask for a 12-month plan covering hiring, financing, expansion, estimated taxes, retirement contributions, and major purchases. Also ask how often you will meet and which reports the CPA will provide.

Clear communication matters. Confirm which services are included, how quickly questions are answered, and who will handle your account. This helps prevent confusion when deadlines or major financial decisions arise.

Ask Better Questions With Nidhi Jain CPA

Nidhi Jain CPA helps business owners connect bookkeeping, tax planning, cash flow, and future decisions. Review the financial questions before hiring a CPA with a certified public accountant who can help build a clear financial plan based on your business needs. Contact us now.