The simple answer is that it's nothing good. In fact, after doing some digging, we're pretty sure you'd be better off filling out your tax forms in crayon than sitting on your hands and letting the IRS have at you.
“There’s simply no hiding from the IRS," says Odysseas Papadimitriou, CEO of Cardhub.com. "Level with yourself as well as the IRS about your ability to pay, pick a payment option that makes the most sense, and make sure to honor the terms of your agreement.”
Just in case you were curious, here's what happens if you don't:
You haven't filed your taxes at all. Skip filing all together and you're already looking at paying a 5 percent monthly fee on however much you owe. It maxes out at 25 percent. If you wait more than 60 days to file, then you'll get hit with a $135 fine, or 100 percent of the taxes you owe (whichever is less).
You've gotten a filing extension but haven't paid your taxes. Even if you've gotten an extension to file your taxes by Oct. 15, that doesn't mean you get six extra months to pay. The IRS levies a 0.5% fee on your unpaid taxes every month until the balance is paid, PLUS at least 3% in interest that is compounded daily. Ouch.
If you have filed an extension to file AND have paid at least 90% of your tax bill by April 15, however, this penalty doesn't apply. But it doubles if the IRS issues a letter demanding immediate payment.
You haven't filed your taxes OR paid your tax bill. In this case, you have two strikes against you. The IRS will calculate penalties for both and then subtract the late payment fee from your late filing fee. The $135 late charge for filing after 60 days still applies.
You've filed your taxes by April 15 but still haven't paid. First of all, hats off to you for at least filing. The IRS looks kindly on taxpayers who file, even if they can't pay straightaway. On-time filers get a discounted penalty rate of 0.25% per month so long as they have a payment agreement in place.
You've filed your taxes and you want to pay your bill in increments. The IRS does have monthly payment plans for taxpayers who can't fork over funds for their entire bill straightaway. But there are some caveats to consider: An application fee that ranges from $52 to $105, and the late payment and interest charges of 0.05% and 3%, respectively. You can set up a payment plan online here.
Another option would be to consider paying your bill on a 0% interest credit card –– but only if you plan on paying your bill before the promotional period ends. One-time credit/debt card fees apply.
Your only way out : If you want a free pass on paying or filing your taxes on time, you're going to have to come up with a better excuse than a sick day. Per the IRS, you'll need proof of a "r easonable cause" rather than forgetfulness. And don't kid yourself into thinking you're off the hook if a month goes by and no IRS lackeys come calling. It can take anywhere from six months to a year for the agency to catch up to late payers.
And if you've decided to ignore Uncle Sam because you think you won't be able to afford your payment, you're better off at least knowing what you're up against . There are plenty of tax estimate tools available which will give you an idea of what you'll owe or be owed.
See IRS.gov for more details on late fees.
More From Business Insider
- SUZE ORMAN: The US Tax Code Is 'A Travesty' For Gay Couples
- 17 Celebrities Who've Run Into Trouble With The IRS
- In A Perfect World, No One Would Be Excited To Get A Tax Refund