We all have responsibilities as members of a community and of a country. For one, it is our civic duty to contribute to society, and we do this through the payment of our taxes.
Taxes are compulsory contributions, which are levied by the government to be used for things that are needed for a developing society. These are collected to be used for roads and infrastructures that would benefit the masses. Taxes are imposed on various things such as properties, income, sales, capital gains, dividends, import, and estate among other things. It is important for an individual or business to pay their taxes because not doing so is not following taxation compliance.
Non-payment of taxes — deliberate or not — can be subjected to tax evasion This is an illegal activity in which a person or an entity avoids paying true tax liability. Tax evasion is a criminal offense and has substantial penalties and charges.
Individuals and corporate offices can hire people to help them sort out taxes for tax compliance. Accountants can help in auditing and bookkeeping to know how much tax is needed to be paid. This is especially needed in a corporate setting where large finances are handled. Filing taxes properly can be planned and managed easily if an individual or a business handles their finances carefully.
Effects of not filing taxes
Tax season is one of the dreaded times of the year for many, as returns should be filed on a certain date. This gives an individual or an entity months in preparation for that time. Most people think that filing taxes is difficult and confusing, but there are significant repercussions for not properly paying taxes aside from tax evasion, such as:
- Debt will keep growing
Taxes that are not filed on time will have penalties or interest and would substantially increase for a period until dues are paid. Penalties can be “failure to file,” “failure to pay,” or “failure to pay proper estimated tax.” The penalty amount for failure to file is 5% charge of the unpaid tax that is required to be reported. This penalty should be charged every month until the due is paid.
- Affected credit score
If there is an accumulation of unpaid back taxes, the federal government may put a lien on your properties. This is like a repossession of properties that is worth your tax due. This will take a hit on your credit because it will have a domino effect on your finances. Refinancing a home or any property will be a difficulty as long as you owe the government.
- Cost of time and money
Clearing up backed up taxes will cost you time and more money. Even hiring tax professionals to fix your tax situation may cost you. Filling up and preparing itemized forms may cost you money, and it adds up if you owe several years of tax filings as you may need a lot of forms.
Paying taxes on time for any individual or business should not be frightening. Since the money that is spent on taxes is for the development and improvement of a country, which will also benefit us in the long run. So, a contribution to the country is a contribution for all.