Tax day arrives, but fines are only for those who owe

The Internal Revenue Service Building

WASHINGTON — The calendar shows April 15, and you haven’t even started on your federal tax return? Chances are, you don’t need to fret.

If you’re due a refund — and about three-fourths of filers get refunds — April 15 isn’t much of a deadline at all.

The Internal Revenue Service doesn’t like to talk about it, but penalties for filing late federal tax returns apply only to people who owe money. The penalty is a percentage of what you owe. If you owe nothing, 5 percent of nothing is ... nothing!

But it doesn’t make sense to file late. If you are owed a refund, why wouldn’t you want it as soon as possible? If you have unpaid taxes, the late fees add up quickly.

“Most people with refunds are filing early in January, February, and March because they’d like the refund early,” IRS Commissioner John Koskinen said. “So we don’t see an incentive, and we don’t see much experience of people waiting later for us to keep the money longer.”

The failure-to-file penalty is generally 5 percent of your unpaid tax bill for every month, or part of a month, you are late. It kicks in on Wednesday. In general, the maximum penalty is 25 percent of your original tax bill.

There also is a penalty for failing to pay your tax bill, separate from the penalty for failing to file at all, but it’s much smaller. That’s because the IRS wants you to file a return even if you don’t have the money to pay what you owe.

The failure-to-pay penalty is 0.5 percent of your unpaid taxes for every month, or part of a month, you don’t pay.

About 12 million taxpayers are expected to request extensions, giving them an additional six month to file their returns, according to the IRS. However, these taxpayers still must pay at least 90 percent of their tax bill by today to avoid the failure-to-pay penalty.

What if you wait years to file your tax return?

If you’re really late, the IRS will take your refund after three years, turning it over to the Treasury.

Last month, the IRS said it had $760 million waiting to be claimed by an estimated 918,600 taxpayers who did not file returns for 2010.

Some of these people weren’t required to file returns because they didn’t make enough money. But they still may have had taxes withheld from their pay. The 2010 returns were due on April 15, 2011, so those taxpayers have until today to claim their refunds.

As part of the agency’s effort to encourage these taxpayers to come forward, the IRS reassured in its news release: “There is no penalty for filing a late return qualifying for a refund.”