All taxpayers who meet the filing requirements are expected to have their returns in to the Internal Revenue Service (IRS) on or before or postmarked by April 15. Taxpayers who neglect to file their returns could be subject to IRS penalties, interest and other enforcement.

Significance

Whether a taxpayer is required to file a return is based on income and filing status, which includes married filing separate, head of household, married filing separate or widow. Check IRS.gov to determine if you're required to file an income tax return.

Considerations

If you are required to file a return and do not file, then the IRS may file a return for you. When the IRS files a substitute return for a taxpayer, it does not include any credits or deductions for which the taxpayer may be eligible.

Penalties

The Failure to File penalty is 5 percent of the tax due for each month the return is late. The Failure to Pay penalty is ½ of 1 percent of the unpaid tax for each month the past due tax is not paid. For example, if you owe $1,000 in tax and don't file for two years, you will then owe $1,320 once penalties are added. And tacking on interest, you're looking at an additional $140--depending on the tax rate for the two years in which you did not file).

Interest

The interest is determined quarterly and can be found at IRS.gov. Interest compounds daily and cannot be removed from the balance you owe.

Warning

The IRS statute of limitations only allows you three years from the time the return was due to file it and be eligible for a refund. Also, taxpayers who are owed a refund are not assessed any penalties or interest for failing to file a timely return.

Source:

Internal Revenue Service: Interest Rates Drop for First Quarter in 2009

Internal Revenue Service: Determination of Rates of Interest

Internal Revenue Service: Help Yourself by Filing Past Due Returns

More Information:

Internal Revenue Service: Automated Filing Substitute for Return