It is recommended that you file any tax returns that are due, whether or not you can pay your tax liability in full. The longer you wait to file, the higher your late fees and interest charges will be.

Filing a tax return on time is always your best option. There are numerous problems that can arise if you fail to file a timely Federal income tax return, including the following:

  • If you don’t file at all, you risk losing out on a tax credit or tax refund. To claim your refund or certain tax credits (such as the Earned Income Tax Credit) you must file your tax return within 3 years of its due date, including extensions. In cases where one or more tax returns are past due, the IRS will hold onto the refunds until the late return(s) are filed, or until you provide an acceptable reason for not filing on time.
  • If you are filing as a minister and fail to file a Federal tax return, your self-employment income will not be reported to the Social Security Administration, which means you will not get credits toward Social Security benefits.
  • When you neglect to file a tax return, you risk delaying other necessary financial transactions. For example, copies of filed tax returns must be submitted to buy or refinance a home, acquire a business loan, or apply for Federal student aid.
  • By not filing your tax return, you risk having the IRS prepare a substitute return for you. A substitute return will rarely be prepared to your advantage because it will not include any tax exemptions, tax deductions, or credits that you are entitled to claim. You will then receive a Notice of Deficiency CP3219N (90-day letter) notifying you of the proposed tax assessment. In response, you will have 90 days to file your own return or file a petition in United States Tax Court. No tax extension is allowed in this circumstance, and after 90 days you will receive a tax bill, which will go to IRS Collection if it is not paid.

If you are unable to file a timely return, there are still things you can do to minimize the damage.

To start, it is always best to file your tax returns by the proper deadline, whether or not you can pay the tax due in full. This will help limit the interest charges and penalties. Note that you will owe interest on any tax amount that isn’t paid by the April 15 deadline, which will continue to accrue until the tax is paid. Therefore, you should try to pay as much as you can as soon as possible.

If you cannot pay your taxes due, you can request an additional 60–120 days to fully pay your tax liability through an Online Payment Agreement Application or by calling the IRS at 1-800-829-1040. If you need to request extra time to pay, you can look into setting up an “Installment Agreement” or an “Offer in Compromise.”

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Clergy Financial Resources serves as a resource for clients to help analyze the complexity of clergy tax law, church payroll & HR issues. Our professionals are committed to helping clients stay informed about tax news, developments and trends in various specialty areas.

This article is intended to provide readers with guidance in tax matters. The article does not constitute, and should not be treated as professional advice regarding the use of any particular tax technique. Every effort has been made to assure the accuracy of the information. Clergy Financial Resources and the author do not assume responsibility for any individual’s reliance upon the information provided in the article. Readers should independently verify all information before applying it to a particular fact situation, and should independently determine the impact of any particular tax planning technique. If you are seeking legal advice, you are encouraged to consult an attorney.

For more information or if you need additional assistance, please use the contact information below.

Clergy Financial Resources
11214 86th Avenue N.
Maple Grove, MN 55369

Tel: (888) 421-0101 
Fax: (888) 876-5101


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