With April 15 coming up quickly, most residents of Frankfort and the other Chicago suburbs are looking forward to filing their taxes, paying what they owe or collecting their refund and being done with income taxes for the year.
However, some residents of Illinois and Illinois business owners will inevitably face an audit from the IRS. At times, these audits are simply luck of the draw, but in many if not most cases, the IRS has a reason to want to check over a filer’s tax return and see if there are any mistakes.
Should the IRS find a mistake in the taxpayer’s favor, the agency will demand that the taxpayer pay what they still owe and do so with interest. Additionally, the IRS may in certain circumstances impose an additional penalty.
Perhaps the most common penalty is a penalty for a late payment. Even if a person gets an extension to file his or her return, payments are still due on April 15. A failure to timely pay will lead to a .5 percent monthly surcharge on the amount a taxpayer owes and has not timely paid.
In some cases, more severe penalties may also apply. For instance, if a taxpayer by a significant margin winds up underreporting his or her income or misstating the value of his or her property, the IRS may impose an additional penalty of up to 20 percent of the balance owed. This penalty may apply even if a taxpayer simply made a mistake, but a taxpayer can argue for a waiver of the penalty.
The IRS may at times also assess a significant fine or even press criminal charges if it believes a person’s underreporting of income was more than an accident.
Any taxpayer facing IRS penalties in the course of an audit may wish to speak with an experienced tax attorney.