Q I'm expecting a refund, but I have not filed my return and the deadline has passed. Will a late penalty be charged?
A If there is a refund due to you, no penalty for late filing or late paying will be charged. The penalty is based upon the unpaid taxes as of the due date of the return.Q I just completed my individual income tax return and find that I owe the state money. What should I do?
A You should file and pay as much as possible by the due date, even if you can't pay all of the amount you owe. By filing on time, you avoid the late filing penalty. Paying as much of the amount you owe as possible will reduce the amount of interest and late-payment penalty that you will owe. Click here for more details on interest and penalties.Q Can I ask to make installment payments on the amount I owe?
A Yes. If you cannot pay the full amount due with your return, you may ask to make monthly installment payments. However, you will be charged interest and a late payment penalty on the tax not paid by the due date of the return, even if your request to pay in installments is granted. Before requesting an installment agreement, you should consider other alternatives. If the amount of tax you owe exceeds certain threshholds, a tax lien may be filed to secure the "loan". Also, you may find it to be less expensive, after penalty and interest are applied, to borrow the money from a lending institution. To discuss the possibility of setting up an installment agreement, call 801.297.7703.Q What kind of penalties and interest will I be charged for paying and filing my taxes late?
A Each individual is granted a six-month automatic extension of time to file a return (not to pay). During this period, only the extension penalty will apply (see next question on extensions). At the end of six months or once the return is filed, the extension period expires. If a return is filed within the extension period but not paid in full, a 10% or $20 late payment penalty will be assessed in addition to any applicable extension penalty. After the extension period has expired, if a tax due return is filed, there will be both a failure to file penalty of 10% or $20, whichever is greater, and a failure to pay penalty or 10% or $20, whichever is greater. Interest is assessed on any unpaid tax from the original due date (usually April 15th) to the date the tax is paid. For current and previous interest rates, follow this link.Q What happens if I need an extension to file?
A All individuals are granted a six-month automatic extension of time to file a return. Remember, this is an extension of time to FILE, not to PAY. In order to avoid extension penalty, you must meet the extension requirements and must have prepaid, by the original due date of the return, an amount equal to either:Prepayments can be in the form of withholding, direct payments or other credits. If the extension requirements are met, no penalty will be assessed. Interest is assessed on any unpaid tax from the original due date (usually April 15th) to the date the tax is paid in full. For current and previous interest rates, follow this link.
If those conditions are not met, an extension penalty on the unpaid tax will be assessed at a rate of 2 percent per month, up to 12%, calculated on a daily basis, until the date the return is filed. To calculate the penalty, the following formula is used:
(unpaid tax) x .12 x (number of days) ÷ 183
Example: if $100.00 is owing for 45 days:
the penalty is $2.95. The calculation used is this: $100.00 x .12 x (45) ÷ 183
In addition, if you filed on time but didn't pay on time, you'll be assessed a late payment penalty of 10% or $20, whichever is greater.
Q Can I get penalties waived?
A Under certain conditions, the Tax Commission may waive penalties and/or interest. For information on the requirements for waivers, see Publication 17, Waivers: Reasonable Cause.Q What is the state's interest rate for past-due taxes?
A Interest, compounded daily, is charged on any unpaid tax from the due date of the return until the date of payment. The interest rate is set annually, and is based on the federal short-term rate plus 2 percent, established during the last calendar quarter of the previous year. Follow this link to find the current or previous year's rates.Q Can my refund be used to pay other debts?
A Under state law, the Tax Commission may withhold state income tax refunds to satisfy outstanding tax debts. The law also permits the State Department of Finance, which issues the refund checks, to withhold refunds for other reasons. Your tax refund may not be refunded to you if you are delinquent in child support payments, if you have outstanding traffic tickets or you have a past-due federal debt (such as a student loan). Therefore, your refund may be used to pay other debts you owe. However, if the debts are premarital obligations of your spouse, you can apply for "Injured Spouse" protection directly to the agency the refund was sent to.Q I am unable to pay my delinquent taxes. Will the Tax Commission accept an "offer in compromise?"
A An offer-in-compromise may be an alternative for resolving your tax delinquency. The State Tax Commission accepts an offer in compromise to settle unpaid accounts for less than the amount owed when doubt exists as to whether you owe the liability or when there is doubt that the liability can be collected in full and your offer reasonably reflects collection potential. Refer to Publication 22, Offers-in Compromise, for additional information.Q I received a bill for a past-year return that I did not file. The bill is very large and I know I could not have owed that much in tax. What should I do?
A What you may have received is an estimated billing as part of a non-filing audit. A non-filing audit is based on information received (such as W-2, 1099 or other information) that was not reported on a return. The billing you received looks high because it is estimated based upon the "single" filing status, does not take into account any dependents you might have, and does not give you credit for any withholding you may have had from that income.The first thing you must do is gather your documents from that time period and file the return for that tax year. Under Utah law, in order to be given credit for your tax withholding, you must first file a return. Once you file a return, and claim that withholding and other appropriate deductions and credits, the tax due will be reduced to an appropriate amount. However, if you find you are due a refund for that tax period, you may not be able to receive it if the statute of limitations has passed. The statute of limitations on refunds is three years plus any period of extension.
Q I have not filed tax returns for several years. What should I do?
A Call (801) 297-2200 or 1-800-662-4335 and ask to speak to Operation Fresh Start. The person you talk to will answer your tax questions and help you obtain blank prior-year forms. If you are also filing past-year returns with IRS and expect to owe both state and federal tax, the Tax Commission and IRS will work together to help you work out a payment plan, if one is needed. Under certain circumstances, penalties may be waived. For more information, see Publication 17, Waivers: Reasonable Cause.
