I believe this may have been asked here in the past, but I don't recall the answer.Failure to file penalties are a percentage of what you owe. Be prepared to show evidence if the IRS comes knocking in three years.
Assume a person's only primary income is through employment and they
withhold enough money during the year so that they owe no net taxes at
filing time. Maybe they have some other income like interest on savings accounts or some other form of miscellaneous income, but they make sure
their employment withholding is just enough so that by filing time they either exactly break even or are entitled to a refund of just a few cents or a couple of dollars. Is it possible for someone to proceed through a
working career of several years or even decades without ever filing a tax return and suffer no consequences?
I realize it would take a certain amount of planning to pull this off year after year, but it wouldn't be that difficult if most of the income is from wages subject to withholding. Has anyone ever heard of anyone doing this,
and is it really true that there would be no consequences other than, say, the loss over several decades of perhaps a few hundred dollars in refunds never taken?
On Saturday, November 11, 2023 at 8:05:20 PM UTC, Rick wrote:
I believe this may have been asked here in the past, but I don't recallFailure to file penalties are a percentage of what you owe. Be prepared to >show evidence if the IRS comes knocking in three years.
the
answer.
Assume a person's only primary income is through employment and they
withhold enough money during the year so that they owe no net taxes at
filing time. Maybe they have some other income like interest on savings
accounts or some other form of miscellaneous income, but they make sure
their employment withholding is just enough so that by filing time they
either exactly break even or are entitled to a refund of just a few cents
or
a couple of dollars. Is it possible for someone to proceed through a
working career of several years or even decades without ever filing a tax
return and suffer no consequences?
I realize it would take a certain amount of planning to pull this off
year
after year, but it wouldn't be that difficult if most of the income is
from
wages subject to withholding. Has anyone ever heard of anyone doing this,
and is it really true that there would be no consequences other than,
say,
the loss over several decades of perhaps a few hundred dollars in refunds
never taken?
"NadCixelsyd" wrote in message news:5461bff3-2b4d-44d0-af97-298c1325a454n@googlegroups.com...
Failure to file penalties are a percentage of what you owe. Be prepared to >show evidence if the IRS comes knocking in three years.
But in this case, what penalties would there be if the person paid
everything they owe plus a smidge more during the year through withholding, and kept doing this year after year? That's the premise of the question.
"NadCixelsyd" wrote
Rick wrote:
I believe this may have been asked here in the past, but I don'tFailure to file penalties are a percentage of what you owe. Be
recall the
answer.
Assume a person's only primary income is through employment and
they withhold enough money during the year so that they owe no
net taxes at filing time. Maybe they have some other income like
interest on savings accounts or some other form of miscellaneous
income, but they make sure their employment withholding is just
enough so that by filing time they either exactly break even or
are entitled to a refund of just a few cents or
a couple of dollars. Is it possible for someone to proceed
through a working career of several years or even decades
without ever filing a tax return and suffer no consequences?
I realize it would take a certain amount of planning to pull
this off year
after year, but it wouldn't be that difficult if most of the
income is from
wages subject to withholding. Has anyone ever heard of anyone
doing this, and is it really true that there would be no
consequences other than, say,
the loss over several decades of perhaps a few hundred dollars
in refunds never taken?
prepared to show evidence if the IRS comes knocking in three
years.
But in this case, what penalties would there be if the person paid
everything they owe plus a smidge more during the year through
withholding, and kept doing this year after year? That's the
premise of the question.
"Rick" <rick@nospam.com> wrote:
"NadCixelsyd" wrote
Rick wrote:
I believe this may have been asked here in the past, but I don'tFailure to file penalties are a percentage of what you owe. Be
recall the
answer.
Assume a person's only primary income is through employment and
they withhold enough money during the year so that they owe no
net taxes at filing time. Maybe they have some other income like
interest on savings accounts or some other form of miscellaneous
income, but they make sure their employment withholding is just
enough so that by filing time they either exactly break even or
are entitled to a refund of just a few cents or
a couple of dollars. Is it possible for someone to proceed
through a working career of several years or even decades
without ever filing a tax return and suffer no consequences?
I realize it would take a certain amount of planning to pull
this off year
after year, but it wouldn't be that difficult if most of the
income is from
wages subject to withholding. Has anyone ever heard of anyone
doing this, and is it really true that there would be no
consequences other than, say,
the loss over several decades of perhaps a few hundred dollars
in refunds never taken?
prepared to show evidence if the IRS comes knocking in three
years.
Or six years or ten years or more. If you don't file, the statute of >limitations never starts to run. So at some time in the future the
IRS decides that you owe them money, they can come after you forever.
But in this case, what penalties would there be if the person paid
everything they owe plus a smidge more during the year through
withholding, and kept doing this year after year? That's the
premise of the question.
But how does the IRS know that all that person's taxes have been
paid? They won't just assume that no return means everything is fine
and that no money is due.
"Stuart O. Bronstein" wrote in message news:XnsB0BBA6E57317Cavocatstuyahoofr@130.133.4.11...
"Rick" <rick@nospam.com> wrote:
"NadCixelsyd" wrote
Rick wrote:
I believe this may have been asked here in the past, but IFailure to file penalties are a percentage of what you owe. Be >>>>prepared to show evidence if the IRS comes knocking in three
don't recall the
answer.
Assume a person's only primary income is through employment
and they withhold enough money during the year so that they
owe no net taxes at filing time. Maybe they have some other
income like interest on savings accounts or some other form of
miscellaneous income, but they make sure their employment
withholding is just enough so that by filing time they either
exactly break even or are entitled to a refund of just a few
cents or a couple of dollars. Is it possible for someone to
proceed through a working career of several years or even
decades without ever filing a tax return and suffer no
consequences?
I realize it would take a certain amount of planning to pull
this off year
after year, but it wouldn't be that difficult if most of the
income is from
wages subject to withholding. Has anyone ever heard of anyone
doing this, and is it really true that there would be no
consequences other than, say,
the loss over several decades of perhaps a few hundred dollars
in refunds never taken?
years.
Or six years or ten years or more. If you don't file, the statute
of limitations never starts to run. So at some time in the future
the IRS decides that you owe them money, they can come after you
forever.
But in this case, what penalties would there be if the person
paid everything they owe plus a smidge more during the year
through withholding, and kept doing this year after year?
That's the premise of the question.
But how does the IRS know that all that person's taxes have been
paid? They won't just assume that no return means everything is
fine and that no money is due.
But what's the remedy? If the penalty for failing to file is some
percentage of unpaid taxes, in this case there are no unpaid
taxes. In this case, the IRS computers will see that it has
collected taxes from a particular SSN and that the person has
incurred a certain amount of income, and the computers will
calculate that the right amount was paid. Sure, the computers
will also detect that no returns have been filed, but since the
statutory remedy is apparently to bill the customer for unpaid
taxes, isn't the likely result that the taxpayer will get a bill
showing either zero owed or else a small credit due back to the
customer?
I believe this may have been asked here in the past, but I don't recall the answer.
Assume a person's only primary income is through employment and they
withhold enough money during the year so that they owe no net taxes at
filing time. Maybe they have some other income like interest on savings accounts or some other form of miscellaneous income, but they make sure
their employment withholding is just enough so that by filing time they either exactly break even or are entitled to a refund of just a few cents or a couple of dollars. Is it possible for someone to proceed through a
working career of several years or even decades without ever filing a tax return and suffer no consequences?
I realize it would take a certain amount of planning to pull this off year after year, but it wouldn't be that difficult if most of the income is from wages subject to withholding. Has anyone ever heard of anyone doing this,
and is it really true that there would be no consequences other than, say, the loss over several decades of perhaps a few hundred dollars in refunds never taken?
--
"Rick" <rick@nospam.com> wrote:
"Stuart O. Bronstein" wrote in message
news:XnsB0BBA6E57317Cavocatstuyahoofr@130.133.4.11...
"Rick" <rick@nospam.com> wrote:
"NadCixelsyd" wrote
Rick wrote:
I believe this may have been asked here in the past, but IFailure to file penalties are a percentage of what you owe. Be >>>>>prepared to show evidence if the IRS comes knocking in three
don't recall the
answer.
Assume a person's only primary income is through employment
and they withhold enough money during the year so that they
owe no net taxes at filing time. Maybe they have some other
income like interest on savings accounts or some other form of
miscellaneous income, but they make sure their employment
withholding is just enough so that by filing time they either
exactly break even or are entitled to a refund of just a few
cents or a couple of dollars. Is it possible for someone to
proceed through a working career of several years or even
decades without ever filing a tax return and suffer no
consequences?
I realize it would take a certain amount of planning to pull
this off year
after year, but it wouldn't be that difficult if most of the
income is from
wages subject to withholding. Has anyone ever heard of anyone
doing this, and is it really true that there would be no
consequences other than, say,
the loss over several decades of perhaps a few hundred dollars
in refunds never taken?
years.
Or six years or ten years or more. If you don't file, the statute
of limitations never starts to run. So at some time in the future
the IRS decides that you owe them money, they can come after you
forever.
But in this case, what penalties would there be if the person
paid everything they owe plus a smidge more during the year
through withholding, and kept doing this year after year?
That's the premise of the question.
But how does the IRS know that all that person's taxes have been
paid? They won't just assume that no return means everything is
fine and that no money is due.
But what's the remedy? If the penalty for failing to file is some
percentage of unpaid taxes, in this case there are no unpaid
taxes. In this case, the IRS computers will see that it has
collected taxes from a particular SSN and that the person has
incurred a certain amount of income, and the computers will
calculate that the right amount was paid. Sure, the computers
will also detect that no returns have been filed, but since the
statutory remedy is apparently to bill the customer for unpaid
taxes, isn't the likely result that the taxpayer will get a bill
showing either zero owed or else a small credit due back to the
customer?
The IRS may well assume that your income is as reported, and you are
entitled to no deductions, which would mean more taxes than were paid
in. If you don't keep records well enough to file a tax return, you
may not have good enough records to keep from owing taxes when you
shouldn't.
I believe this may have been asked here in the past, but I don't recall the answer.
Assume a person's only primary income is through employment and they
withhold enough money during the year so that they owe no net taxes at
filing time. Maybe they have some other income like interest on savings accounts or some other form of miscellaneous income, but they make sure
their employment withholding is just enough so that by filing time they either exactly break even or are entitled to a refund of just a few cents or a couple of dollars. Is it possible for someone to proceed through a working career of several years or even decades without ever filing a tax return and suffer no consequences?
I realize it would take a certain amount of planning to pull this off year after year, but it wouldn't be that difficult if most of the income is from wages subject to withholding. Has anyone ever heard of anyone doing this, and is it really true that there would be no consequences other than, say, the loss over several decades of perhaps a few hundred dollars in refunds never taken?
On Saturday, November 11, 2023 at 3:05:20 PM UTC-5, Rick wrote:
I believe this may have been asked here in the past, but I don't recall
the
answer.
Assume a person's only primary income is through employment and they
withhold enough money during the year so that they owe no net taxes at
filing time. Maybe they have some other income like interest on savings
accounts or some other form of miscellaneous income, but they make sure
their employment withholding is just enough so that by filing time they
either exactly break even or are entitled to a refund of just a few cents
or
a couple of dollars. Is it possible for someone to proceed through a
working career of several years or even decades without ever filing a tax
return and suffer no consequences?
I realize it would take a certain amount of planning to pull this off
year
after year, but it wouldn't be that difficult if most of the income is
from
wages subject to withholding. Has anyone ever heard of anyone doing this,
and is it really true that there would be no consequences other than,
say,
the loss over several decades of perhaps a few hundred dollars in refunds
never taken?
--
It *might* be possible if they were single, but not if they were married. >After several years of unfiled returns, the IRS will begin preparing SFR >freturns for the taxpayer. In the case of a married taxpayer, the returns >will be prepared as if the taxpayer was single. If the withholdings were >planned using MFJ rates they would be insufficient.
Even as a single taxpayer, the task would take more effort than it's worth, >since payroll withholding tables are often designed with political
objectives in mind and not to exactly match a projected tax liability.
Ira Smilovitz, EA
Leonia, NJ
"ira smilovitz" wrote in message news:b9bb1b0d-e072-4f51...@googlegroups.com...
On Saturday, November 11, 2023 at 3:05:20 PM UTC-5, Rick wrote:
I believe this may have been asked here in the past, but I don't recall
the
answer.
Assume a person's only primary income is through employment and they
withhold enough money during the year so that they owe no net taxes at
filing time. Maybe they have some other income like interest on savings
accounts or some other form of miscellaneous income, but they make sure
their employment withholding is just enough so that by filing time they
either exactly break even or are entitled to a refund of just a few cents >> or
a couple of dollars. Is it possible for someone to proceed through a
working career of several years or even decades without ever filing a tax >> return and suffer no consequences?
I realize it would take a certain amount of planning to pull this off
year
after year, but it wouldn't be that difficult if most of the income is
from
wages subject to withholding. Has anyone ever heard of anyone doing this, >> and is it really true that there would be no consequences other than,
say,
the loss over several decades of perhaps a few hundred dollars in refunds >> never taken?
--
It *might* be possible if they were single, but not if they were married. >After several years of unfiled returns, the IRS will begin preparing SFR >freturns for the taxpayer. In the case of a married taxpayer, the returns >will be prepared as if the taxpayer was single. If the withholdings were >planned using MFJ rates they would be insufficient.
Even as a single taxpayer, the task would take more effort than it's worth, >since payroll withholding tables are often designed with political >objectives in mind and not to exactly match a projected tax liability.
Ira Smilovitz, EA
Leonia, NJ
So it sounds like what you're saying is that the IRS response after seeing
no returns filed for multiple years would be to file an SFR return (which Google informs me is a "Substitute for Return"), and if the taxpayer has
paid enough, then no further action is taken. I agree this sound like more effort than it's worth, but the original premise of the question was someone doing this knowingly and craftily, making sure they withhold enough to cover what the IRS could calculate (e.g, withholding at the single rate and possibly even having additional amounts withheld to make sure there is no balance). Not sure why someone would do this - maybe to make some kind of political statement or perhaps to just sock it to the IRS - but it seems clear they could get away with it.
--
On 11/11/2023 12:05 PM, Rick wrote:
I believe this may have been asked here in the past, but I don't recall
the
answer.
Assume a person's only primary income is through employment and they
withhold enough money during the year so that they owe no net taxes at
filing time. Maybe they have some other income like interest on savings
accounts or some other form of miscellaneous income, but they make sure
their employment withholding is just enough so that by filing time they
either exactly break even or are entitled to a refund of just a few cents
or
a couple of dollars. Is it possible for someone to proceed through a
working career of several years or even decades without ever filing a tax
return and suffer no consequences?
I realize it would take a certain amount of planning to pull this off
year
after year, but it wouldn't be that difficult if most of the income is
from
wages subject to withholding. Has anyone ever heard of anyone doing
this,
and is it really true that there would be no consequences other than,
say,
the loss over several decades of perhaps a few hundred dollars in refunds
never taken?
Many of the answers don't answer your specific question but give the valid >advice that if the IRS comes knocking, the burden is on you to file correct >returns and show that you don't owe anything, in which case the penalty
would be zero, so it seems.
I recall a long time ago hearing of some guy we knew who would do something >similar: he would make sure he over withheld, then didn't file taxes for a >few years because it wasn't worth the hassle. Never heard if the IRS ever >came knocking, or for how many years he did this. I also don't know if he >was prepared to file and show he didn't owe anything. Seems most people of >this mind, i.e. too much of a hassle, would likely think keeping records is >too much of a hassle too.
I trust this is merely an academic question, eh?
"Rick" <rick@nospam.com> wrote:
Failure to file penalties are a percentage of what you owe. Be
prepared to show evidence if the IRS comes knocking in three
years.
Or six years or ten years or more. If you don't file, the statute of limitations never starts to run.
From slide 11 of <https://www.irs.gov/pub/irs-utl/int_c_115r.pdf>:
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