Delinquent Return

A delinquent return is a tax return that is not filed within the time prescribed by the Internal Revenue Code (due date). It may be subject to penalties based on the unpaid tax liability.
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Delinquent Return

Definition

A delinquent return refers to a tax return that a taxpayer fails to file by the due date prescribed by the Internal Revenue Code (IRC). When a return is not submitted within this timeframe, it may incur penalties, which can be either a flat fee or contingent upon the amount of unpaid tax liability.

Examples

  1. Individual Income Tax Return: An individual fails to file their annual Form 1040 by the April 15 deadline.
  2. Business Tax Return: A corporation does not submit its Form 1120 by the March 15 deadline.
  3. Quarterly Payroll Tax Return: An employer fails to file Form 941 by the respective quarterly due dates.

Frequently Asked Questions (FAQ)

Q1: What are the consequences of filing a tax return late? A1: Late filing of a tax return can result in penalties and interest. The Failure-to-File Penalty is typically more severe and accumulates over time.

Q2: How is the Failure-to-File Penalty calculated? A2: The penalty is generally 5% of the unpaid taxes for each month or part of a month that the return is late, up to a maximum of 25%.

Q3: Can the Failure-to-File Penalty be waived? A3: Yes, the IRS may waive the penalty if you can show reasonable cause for the delay in filing.

Q4: What should I do if I cannot file my return by the due date? A4: You should file for an extension using Form 4868 for individuals or Form 7004 for businesses, which typically grants an additional six months to file.

Q5: Is an extension to file also an extension to pay any taxes due? A5: No, an extension to file does not extend the due date for payment of any taxes owed. Taxes are still due on the original deadline.

  • Failure-to-File Penalty: A penalty imposed by the IRS for not filing a tax return by the deadline.
  • Failure-to-Pay Penalty: A penalty for not paying the amount of tax owed by the due date.
  • Tax Extension: A formal request made to the IRS to extend the deadline for filing a tax return.
  • Interest on Unpaid Taxes: Interest charges on tax amounts not paid by the due date, in addition to penalties.

Online References

Suggested Books for Further Study

  • “J.K. Lasser’s Your Income Tax Professional Edition 2023” by J.K. Lasser Institute
  • “Tax Savvy for Small Business” by Frederick W. Daily
  • “Stand Up to the IRS” by Frederick W. Daily

Fundamentals of Delinquent Return: Taxation Basics Quiz

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