Believe it or not, the Internal Revenue Service is an institution that is quite fair; it would always give you the chance to file back taxes, even if it is a 2005 tax return. The main thing you need to remember is that just like any other financial institute, the IRS will have the authority to impose penalties and interests on your tax debts. The other part of this equation is that the IRS may, if you have tax refunds for your 2005 tax return, pay you interest on the said refund as well. Of course, it will only calculate delayed refund interest if it was the IRS' fault that you did not receive the refund right away.

Now, back to filing late taxes; you will not be charged penalties for late tax returns filing if you are entitled to a refund. Interest can only be put above debts and since you did not have to pay anything then there is essentially, no debt. However, if you do owe the IRS, they will collect on that and the interest that was sanctioned upon the debt. You will also be charged fees for penalties in failing to file and in failing to pay that penalty aside from the interest accrued by the debt.

Did that confuse you? Let us try to look at each of those fees you will have to pay then. The penalty for failure to file is calculated from the deadline of a tax return submission up to the time you finally filed your tax return. There is a maximum charge of 25% for this fee. Since you evidently did not pay ant tax you owe the IRS, you are also going to have to pay for 'failure to pay.' Every month that you did not pay for your tax debt, an interest of 0.5% is added to the tax you owe.

Author: Robert Johnson

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Article source: Free Taxes Articles.