I am curious about the ramifications of not reporting taxes. What happens if someone fails to file their taxes on time or at all? I’ve heard there may be penalties and other concerns, but I would like to learn more about the possible outcomes. Any suggestions or experiences you could provide would be really helpful
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Not much for a while. After that, money will start to evaporate from both your wages and bank account. Credit will not be available to you. Years may pass before this happens. More likely, as a thank you, the government will pester you to file while taking the money they owe you for overspending. You have one month to cool off and file later.
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Here’s what can happen if you don’t file your taxes:
Penalties and Interest
- Failure to File Penalty: The IRS imposes a penalty of 5% of the unpaid taxes for each month your return is late, up to a maximum of 25%.
- Failure to Pay Penalty: There is also a penalty for not paying the taxes you owe, typically 0.5% per month, up to a maximum of 25%. These penalties can accumulate quickly.
- Interest: The IRS charges interest on any unpaid taxes, which accrues monthly and can significantly increase your debt.
More Serious Consequences
- Liens and Levies: If you owe a substantial amount in back taxes, the IRS can place a lien on your property or levy (seize) your assets to collect the debt. This can complicate selling property or accessing your bank accounts.
- Wage Garnishment: The IRS can garnish your wages, meaning they take a portion of your paycheck to pay off your tax debt.
- Criminal Charges: In extreme cases, the IRS can pursue criminal charges for tax evasion, leading to significant fines and even jail time.
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There is not filing tax returns at all and there’s is delaying. Both are against the law
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failing to submit annual reports by the deadline. Penalty: An additional tax of Ksh. 10,000 for non-individual taxpayers, or 5% of the regular tax.