As we enter into tax season, and as our firm continues to see people encounter problems due to misconceptions regarding tax filing, we have decided to recirculate this information from a post last year.  Being informed on these issues may help you from creating additional, unnecessary problems.

Although, the proper method of filing your return is to pay your tax at the same time, it does not mean that both have to be done at the same time.  Even if you owe money on your return and cannot afford to pay it, you should still file the tax return on time for several reasons.  First, you can avoid failure to file penalties that can be imposed on a late tax return.  Also, if you need to set up an installment agreement to pay the debt, the IRS will not work with you until your return is filed.  By filing the return you are being compliant and also the amount due is determined.  If your return is not filed, you cannot set up any arrangement to pay your tax.  Lastly, if you fail to file your tax return the IRS may file a return for you using a “substitute for return.”  This is a process where the IRS will take all information reported to them, mainly income items only, and prepare a return for you.  Since the IRS does not have deduction information or other details, these returns are usually very unfavorable to the taxpayer.  The substitute for return can be updated with an actual return but it is a longer process than simply filing the return on time.

On the other side, another common misconception is that if the tax return shows a refund or no tax due the filing date is not important.  For the same reasons as above this is not true.  Even if you file a return showing a refund, if it is after the due date you can still be assessed failure to file penalties.  Also, due to the process discussed for a substitute for a return, just because you show a refund on your tax return does not mean the IRS will also show a refund if they prepare a substitute for return.

Overall, filing tax returns and paying tax is a process that can quickly get out of hand if you fall behind, causing you stress, penalties, and unnecessary headaches.  When dealing with the IRS it is almost always better to do as much as you can even if it is not everything.  You need a starting point for resolving a tax issue.  The longer you avoid the entire situation the fewer options you have, the more exposure to penalties you have and the situation could get out of control before you know it.  If you have questions about late filing, penalties or other tax issues contact us at Hone Maxwell LLP today.  Also,  you can follow us on twitter @HMLLPTax or facebook at for more tax tips and the latest updates on tax news.

Disclaimer: Hone Maxwell LLP articles and blogs are not intended as legal advice. Additional facts, facts specific to your situation or future developments may affect subjects contained herein. Seek the advice of an attorney before acting or relying upon any information herein.

Latest Post


12 Marina View #23-01
Asia Square Tower 2
Singapore 018961
+65 8648 3995


3465 Camino Del Rio South, Suite 400
San Diego, CA 92108


Centro Corporativo Dayco
Blvd. General Gustavo Salinas #11050
Suite 602, Col. Aviacion
22014 Tijuana, B.C., Mexico
+52 (664) 504 6415

Entering the U.S. Business Market

Download Our Free Guide

Foreign investors: Learn about options for opening a business and tax compliance in the U.S.