Tax season can be stressful, especially for Nashville residents juggling work, family, and business responsibilities. Sometimes, despite the best intentions, the April tax deadline comes and goes, without the return being filed or the payment made.
If you find yourself in this scenario, the worst thing you can do is ignore the problem. The IRS doesn’t forget, and penalties and interest begin to accumulate the day after the deadline. In such cases, it’s best to call a trusted Nashville CPA firm immediately and follow these steps:
Step 1: File the Return ASAP
The IRS imposes a failure-to-file penalty of 5% of the unpaid taxes for each month—or part of a month—that your return is late, up to a maximum of 25%. On top of that, there’s a failure-to-pay penalty, usually 0.5% per month. While those numbers add up quickly, the IRS is often more lenient toward taxpayers who take the initiative to fix their mistakes.
Organize your documents and meet with your CPA immediately to ensure the return is prepared accurately and submitted electronically for the fastest processing time. If you’re not sure what forms you need or whether you qualify for certain deductions or credits, a professional can provide clarity.
Step 2: Calculate What You Owe
Once the return is filed, the next step is to determine your tax liability, including interest and penalties. This is often where mistakes happen, especially when trying to interpret IRS notices or calculate accrued fees manually.
A CPA firm will use up-to-date IRS guidelines and software to provide a precise estimate. This is particularly helpful if you’re self-employed, received multiple 1099s, or had variable income—common among freelancers, contractors, and business owners in Tennessee.
Step 3: Consider Payment Options
If you can’t afford to pay your full tax bill at once, you still have four options:
- Short-term payment plan: For balances under $100,000, the IRS allows you to pay within 180 days with minimal setup.
- Installment agreement: A long-term monthly payment plan that spreads your balance over several months or years.
- Offer in Compromise (OIC): If you qualify, this lets you settle your tax debt for less than what you owe.
- Currently Not Collectible (CNC) status: If you’re experiencing significant financial hardship, the IRS may temporarily pause collection efforts.
If you aren’t sure which option would work best for your financial situation, don’t hesitate to consult your CPA.
Step 4: Watch for IRS Notices
After the missed deadline, the IRS typically begins sending letters: CP14 for balance due, CP501 as a follow-up, and potentially CP504 if the debt remains unpaid. These notices include deadlines, interest amounts, and payment instructions.
Don’t ignore these letters. They’re time-sensitive and offer clues to how aggressively the IRS may pursue the balance. A CPA can help you interpret the notices, respond correctly, and ensure no deadlines are missed.
Forgetting to pay your taxes by April may feel like a disaster, but it doesn’t have to be. The key is acting quickly and strategically. By working with a trusted CPA firm, you get more than just damage control—you gain a partner who can help prevent future tax headaches and improve your overall financial health.
How an Accounting Firm Reduces Costly Federal Income Tax Errors
