The IRS estimates that each year, about a million individuals who would have received a tax refund do not file a federal tax return.
Werfel said nonfilers who are owed a tax refund are typically lower-income individuals, and that the IRS will take steps to reach out to them.
Why aren’t people filing their taxes? A good percentage of the population may think it is difficult or stressful to do.
In February, the IRS commissioner defended his agency at a congressional hearing centered on the country’s arduous tax code and filing process at a time when some in Congress want to cut IRS funding. While the questioning was ripe with partisan politics, there was a common thread that most politicians and taxpayers could agree on: the need to use technology to make the tax process easier for taxpayers and the IRS itself.
When the income tax was first enacted in 1913, the tax code was just 27 pages long.
New laws and amendments have since expanded it to more than 17,000 pages. Not only is the tax code incredibly lengthy, it also is frequently changing, with an average of 399 changes each year from 2000 through 2022.
“Filing our taxes can be an eye-opening experience if you have yet to pay attention to what you made, your deductions, and current tax laws,” says Jeannie Dougherty, Finance Coach. “The IRS always pushes to hire more employees to assist its citizens during tax season. Accounting software companies and accountants also want to ensure that returns are filed accurately and quickly for refunds.”
If you miss filing your taxes, it’s important to address the situation promptly to minimize any potential penalties and interest charges. First, file your tax return as soon as possible, even if it’s late. The IRS imposes both late filing and late payment penalties, so the sooner you file, the less you may have to pay.
If you owe taxes and cannot pay the full amount immediately, consider applying for an installment agreement with the IRS, which allows you to pay your tax debt over time. Additionally, if you have a reasonable cause for not filing or paying on time, such as a serious illness or unavoidable absence, you can explain your situation to the IRS, which may provide some relief from penalties. It’s also wise to consult with a tax professional who can provide guidance specific to your situation and help you navigate the process of resolving your tax obligations.
Ideally, paying taxes on time can help you avoid a bigger problem down the road.
“The problem is waiting until the very last minute to file your taxes. Waiting creates more pressure to get it done, and more mistakes will likely happen, causing outages of the IRS tax filing system,” says Dougherty.
For those who find themselves consistently struggling with the tax filing process, taking proactive steps throughout the year can ease the burden. Regularly updating financial records and maintaining organized documentation of deductions and income can simplify the filing process. Utilizing tax preparation software or consulting with a tax professional early in the tax season can also prevent the last-minute rush that often leads to errors and stress. Additionally, taxpayers should consider attending IRS-sponsored tax preparation workshops or utilizing community resources offered through libraries or local colleges that often provide free assistance during tax season.
Taxpayers need to stay informed about changes in the tax code that could affect their filings. The IRS and tax professionals often offer updates and guidelines on how new tax laws impact different brackets and deductions. Subscribing to IRS newsletters, visiting their official website regularly, or following trusted tax advice blogs and publications can provide ongoing education and reminders of important filing dates and changes. By staying informed and prepared, taxpayers can navigate the complexities of the tax system more confidently and minimize the risk of costly errors or missed opportunities for deductions and credits.
