With the April 15 tax deadline less than a month away, it’s time to file – or, for many people, time to find reasons for not filing. Believe it or not, the percentage of the taxpaying population who files late or doesn’t file at all is substantial. According to a 2009 CNN report, ten million people were expected to file their 2008 tax returns late. Given such a high number of late filers, it might seem like no big deal to file a few months (or even a few years) after the required submission date. And sure enough, countless reasons and excuses are trotted out each year to justify the decision to file late or not file at all. However, not all of these excuses are useful if and when you are confronted by the IRS. Indeed, some excuses have no validity whatsoever with the authorities, such that using them could actually land you in jail or stick you with hefty penalties. Below, we’ll review 12 of the most popular and frequently used reasons for filing late and not filing – and whether the excuse in question holds any weight with the IRS.
Sheer laziness is a common reason for late or non-filing, and a simple assessment of human nature makes it quite clear why. Unlike car payments or utilities (which trigger immediate consequences for falling behind), there are few if any explicit reminders to pay your income taxes. Put another way, April 15th can – and often does – pass without any visible friction or alarm if you neglected to file a return. The IRS does not send notices or agents to your home in the event that you do not file. Consequently, it is quite easy for a busy or careless person to put filing a return on the back burner amidst other responsibilities with more immediate consequences. Of course, this is not at all acceptable to the IRS. While you will not be discovered right away, make no mistake that you are being tracked in a backlog that someone will eventually see and investigate.
A similar but separate reason for filing late or not at all is forgetfulness. Whereas laziness involves being aware of the need to file and simply neglecting to put in the effort, forgetfulness is when someone “would have” filed, but claims that it just slipped their mind. TaxFables.com tells the story of Juan Ruiz, an owner of three Mexican restaurants who, “…explained that after his preparer gave him the return, he put it in his briefcase and then — just forgot it.” Plausible as such an excuse may sound, TaxFables concludes by stating, “…if you forget, don’t expect the IRS to forgive.” In short, forgetfulness is not a valid or accepted reason for filing late or not filing at all.
Another frequently stated excuse for not filing or filing late is confusion about the filing process. If you are an independent contractor, for instance, filing a tax return is significantly more complicated than filing as an employee. You are responsible for reporting income from the various people who pay you, claiming any deductions you feel you are justified in taking and (in most cases) doing all of this four times a year, rather than just once by April 15. Admittedly, the tax code can be quite confusing and difficult to deal with. The Tax Foundation, for instance, finds the net cost of tax compliance to individuals and businesses to be, “…roughly $275 billion and rising.” Again, however, confusion is no excuse for not filing or filing late as far as the IRS is concerned. It is expected that you will either research how to properly file or hire a professional who can do so on your behalf.
Death or Serious Illness of Taxpayer or Immediate Family
It is quite understandable to delay the filing of a tax return for a death in one’s immediate family. Amidst the chaos and grieving that inevitably follows, the IRS grants some leniency in recognizing this as a legitimate reason for filing late. The same applies to serious illnesses, particularly those contracted by the taxpayer themselves. If you have a documented medical reason for being unable to file a return, the IRS will typically exempt you from fines or penalties connected to the late filing. That being said, the reason must be valid – do not do what Douglas D. Kemmerer did (according to TaxFables.com) and blame not filing ten years of returns on a convoluted disease like “tax phobia.”
Invalid Advice From a “Competent” Professional
Another oft-cited reason for not filing or for filing late is that you were advised toward that course of action by a professional, such as a tax preparer or attorney. Within certain limits, this is an excuse that the IRS will accept. Don’t interpret this too liberally, however. The IRS will not let you off the hook because your smart uncle advised that you did not have to file. Rather, they will investigate whether the person who gave you incorrect advice was a competent or licensed professional. Beyond that, they will likely investigate why a competent or licensed professional told you not to file a return when the law ultimately required you to.
Belief That Paying Income Taxes is Voluntary
A long line of scam artists have persisted in spreading the myth that paying income taxes is voluntary or even a violation of Constitutional rights. TaxGuru.org offers a helpful rebuttal of these myths, including the notion that money is not income because it isn’t backed by gold and that income taxes only apply to federal government employees. Simply put, these ideas are incorrect. As TaxGuru points out, people have done serious jail time for failing to voluntarily pay their income taxes or file returns. While the IRS does its best to deter those who spread these myths, they display no leniency to those who fall for them, either. Attempts to justify late or non-filing using any of them can land you an, “…immediate $10,000 fine” plus whatever penalties already applied to your misdeeds, according to TaxGuru.org.
Active Duty Military Service
Those who are deployed internationally in connection with active duty military service are eligible for extensions on filing their income tax returns. As eHow.com explains, “…if you were active in a combat zone, you are not required to submit any additional forms because the Department of Defense shares the names and social security numbers of service members who are deployed.” If in doubt, however, it never hurts to check to make certain that this exemption applies to you.
Destruction of Records
The IRS typically grants leniency to taxpayers who can prove that their tax or financial records were destroyed at the time they were needed to prepare their return. That is, if your house burns down in a tragic fire and takes your filing cabinet with it, you wont go to jail or pay penalties for not filing. That being said, people have been caught “staging” the destruction of their records to get out of paying before. If you attempt to claim this as an excuse, be prepared for the possibility that the IRS will want to confirm whether your records were destroyed accidentally or coincidentally, rather than intentionally. Police reports, photographs, and eye-witness testimony may all be helpful in demonstrating that the destruction was not caused by you.
Every year, late and non-filers claim ignorance of one form or another as the reason for their misdeed. However, ignorance of the law does not excuse anyone from responsibility for complying with it. Bankrate.com discusses several common excuses falling under the ignorance banner, including:
- “I was afraid to do it wrong, so I just kept gathering information and lost track of time.”
- “My husband refused to file, so I didn’t know what to do.”
- “I was drunk and totally out of it for the last few years. Hey, I was living on the streets. Do you think I cared about taxes?”
Needless to say, none of these excuses hold any weight with the IRS whatsoever. As a sovereign citizen, it is assumed that you will take responsibility for understanding your tax obligations and reporting them in a timely and lawful manner.
Unavailability of IRS Help
If you can demonstrate that the IRS was not available to assist you in filing your return in a timely and lawful manner, this is a recognized and accepted excuse for late filing. Again – whether you can, in practice, escape punishment using this excuse depends on the specifics of what happened. In all likelihood, you will not be able to avoid punishment because you were put on hold for a long time or didn’t get to speak with the first IRS assistant you called. Rather, it will need to be clear that you made an active and reasonable effort to seek help and despite this, did not receive it. Be sure to document the times and dates of any attempted and failed correspondence with the IRS, including who you were attempting to reach and by what means (phone, e-mail, snail mail, etc.)
While we don’t suspect many of our readers will be incarcerated anytime soon, it does serve as a valid excuse for filing late or not filing, because you either did not have access to your financial records or became incarcerated late in the filing season. Then again, most prisoners also do not have any income to report in the first place, so perhaps it’s best to avoid jail altogether and simply file on time.