The IRS is urging taxpayers who haven’t filed their 2021 tax return to file their complete and accurate return electronically as early as possible. This includes taxpayers who have requested an extension.
Although taxpayers who requested an extension have until October 17 this year to file their tax return, filing early will help them get their refund quicker and save them money if they owe interest and penalties.
In a recent news release, IRS Commissioner Chuck Rettig said, “IRS employees continue working hard to process tax returns and address our inventory issues. We continue to urge people to file electronically and do it as soon as possible.”
IRS Increasing Interest Rates
Filing electronically as early as possible can also help taxpayers who did not file an extension and missed the April deadline avoid additional penalties and interest if they owe taxes. The Internal Revenue Service recently announced that interest rates will increase for the calendar quarter beginning July 1, 2022. The rates are the following:
- 5% for overpayments (4% for corporations).
- 2.5% for the portion of a corporate overpayment exceeding $10,000.
- 5% for underpayments.
- 7% for large corporate underpayments.
The new third-quarter rates are calculated based on the federal short-term rate that took effect May 1 and are based on daily compounding. With the rising rates, it becomes more important to make estimated tax payments accurately and on time.
It’s important to note that not filing required tax returns is considered a criminal act and is punishable by a fine of $10,000 and one year in jail for each year not filed. Fortunately, the IRS is willing to work with the average person who has an unfiled tax return. The first step to settling your tax problem is to become compliant by filing all your delinquent tax returns. Once this is done, the IRS will consider any payment plan or tax settlement offer.
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