5 ms·

The "penalties" are just what you owed plus interest. I think the IRS will only charge an actual penalty if they think you were deliberately trying to avoid tax

by creato 7y ago

The "penalties" are just what you owed plus interest. I think the IRS will only charge an actual penalty if they think you were deliberately trying to avoid taxes.

naravara 7y ago
I haven't run afoul of the IRS, but my state tax collection agency didn't even bother notifying me of underpayment, they just sent my account straight to collections to have me hounded by debt collectors. After contracting with a lawyer we determined that not only had I paid my taxes that year, I had OVERPAYED and the state actually owed me $500. When I resubmitted a corrected form for the state tax assessor, they sent me a letter saying the time-limit for requesting a refund for that year had passed and I could go kick rocks. Experiences like that aren't unique and are enough to put lots of people off trusting the government to be on their side for resolving disputes like this. Most people don't separate out their state or local authorities from the feds. It's all just "government" to them. And even the IRS can make life extremely stressful by auditing people who aren't all THAT rich to begin with (because people with real money have lawyers who make it expensive to go after them). I, personally, think the solution is to make the federal (and state) bureaucracy more service oriented rather than treating everything like a punitive law enforcement role. But apparently not many people agree.
russh 7y ago
Unfortunately, the IRS includes ignorance in their definition of deliberately.
rdtsc 7y ago
> The "penalties" are just what you owed plus interest Sure, interest after 6 years can accumulate into a nice penalty sum on top of what is owed. If IRS ends up owing you, and they discover it 6 years later, would they send you the refund with an interest as well? I am guessing they won't.
- astura 7y ago
  I once filed taxes late (filed like 2012 taxes in early 2014) and my refund included interest, I think it was sent in a second check. They also sent me some form the year after that so I could declare the couple dollars interest I got from the IRS as income.
- nightski 7y ago
  Yes the government always pays interest on money it owes you.
  - briandear 7y ago
    Not true. They don’t give you interest on your payroll withholdings. If you overpaid taxes by $5000, you get exactly $5000 back as refund, despite them having that money for a part of the year.
    - creato 7y ago
      They do pay interest that accumulates some time after the filing deadline. This is probably just a practical matter, because accounting for interest during the tax year would be complex/impossible because you would need to know when the various amounts of withholding exceeded the amount owed. I'm not even sure there is a single consistent way of doing this.
    - deleted 7y ago
      [deleted]
  - quickthrower2 7y ago
    Is that interest taxed?
    - colejohnson66 7y ago
      From https://news.ycombinator.com/item?id=21924216 https://news.ycombinator.com/item?id=21924216 Yes.

by creato 7y ago

The "penalties" are just what you owed plus interest. I think the IRS will only charge an actual penalty if they think you were deliberately trying to avoid taxes.

naravara 7y ago

I haven't run afoul of the IRS, but my state tax collection agency didn't even bother notifying me of underpayment, they just sent my account straight to collections to have me hounded by debt collectors. After contracting with a lawyer we determined that not only had I paid my taxes that year, I had OVERPAYED and the state actually owed me $500. When I resubmitted a corrected form for the state tax assessor, they sent me a letter saying the time-limit for requesting a refund for that year had passed and I could go kick rocks. Experiences like that aren't unique and are enough to put lots of people off trusting the government to be on their side for resolving disputes like this. Most people don't separate out their state or local authorities from the feds. It's all just "government" to them. And even the IRS can make life extremely stressful by auditing people who aren't all THAT rich to begin with (because people with real money have lawyers who make it expensive to go after them). I, personally, think the solution is to make the federal (and state) bureaucracy more service oriented rather than treating everything like a punitive law enforcement role. But apparently not many people agree.

russh 7y ago

Unfortunately, the IRS includes ignorance in their definition of deliberately.

rdtsc 7y ago

> The "penalties" are just what you owed plus interest Sure, interest after 6 years can accumulate into a nice penalty sum on top of what is owed. If IRS ends up owing you, and they discover it 6 years later, would they send you the refund with an interest as well? I am guessing they won't.

astura 7y ago
I once filed taxes late (filed like 2012 taxes in early 2014) and my refund included interest, I think it was sent in a second check. They also sent me some form the year after that so I could declare the couple dollars interest I got from the IRS as income.
nightski 7y ago
Yes the government always pays interest on money it owes you.
- briandear 7y ago
  Not true. They don’t give you interest on your payroll withholdings. If you overpaid taxes by $5000, you get exactly $5000 back as refund, despite them having that money for a part of the year.
  - creato 7y ago
    They do pay interest that accumulates some time after the filing deadline. This is probably just a practical matter, because accounting for interest during the tax year would be complex/impossible because you would need to know when the various amounts of withholding exceeded the amount owed. I'm not even sure there is a single consistent way of doing this.
  - deleted 7y ago
    [deleted]
- quickthrower2 7y ago
  Is that interest taxed?
  - colejohnson66 7y ago
    From https://news.ycombinator.com/item?id=21924216 https://news.ycombinator.com/item?id=21924216 Yes.