4 Consequences of Not Filing Form 720 on Time | Simple 720
Form 720 – Recap
Major 4 Consequences of Failing to File Form 720 on Time
1. Penalties
The failure to submit the Form 720 on time can result in serious penalties. Two main penalties for failing to submit the form are as follows:
The penalty for failing to file: In case of failure to file the form, the penalty imposed is 5% of the unpaid tax for each month of delay, but not exceeding 25% of the total unpaid tax.
The penalty for failing to pay: If one fails to pay the required taxes on time, then a penalty of 0.5% of the unpaid tax per month is imposed, not exceeding 25%. Interest at the rate of 0.5% per month (6% per annum) is charged for non-payment of the unpaid tax.
2. Audits and Compliance
When you continuously fail to file Form 720 on time, the IRS may flag your business for a tax audit. Audits are time-consuming and stressful, and they often result in even more penalties and interest if issues are found. Maintaining compliance with IRS filing requirements is crucial to avoid scrutiny and further complications.
3. Reputation
Non-compliance with the filing of Form 720 may greatly harm the reputation of your business. It will make the government and other business owners believe that you are an unreliable and careless business owner who fails to fulfill his obligations. As a result, it may become very difficult for you to get any funding for your business.
4. Missing Benefits of Filing Form 720 on Time
There are certain tax deductions or credits that one might be eligible for when submitting Form 720 within the prescribed timeline. In some cases, manufacturers or importers of particular products can receive excise tax refunds. Such tax breaks cannot be accessed when filing Form 720 late.
Additional Consequences of Failing to File Form 720 on Time
Loss of Business Eligibility for Future Tax Relief:You may be disqualified from receiving tax relief in the future because you do not always file or make payments of your excise tax.
Future Filings Under Scrutiny: Your future filings may be under scrutiny if you miss deadlines or make mistakes in the past.
Business Delays: Noncompliance with filing deadlines may result in delays in your business operations, which depend on government approvals and licenses. This can be related to obtaining licenses needed for business and exporting goods.
Read our Blog on Why you must choose Simple720 for your Form720 filings.
Form 720 Due Dates You Should Never Miss
Below is a table for Form 720 filing due dates that every business owner should be aware of:
These dates are important to keep track of, as missing them can result in penalties, interest, and other consequences we’ve discussed above.
Conclusion
Keeping in mind the deadline to fill Form 720 is very important for your business. If you miss a deadline, you might end up paying penalties and being unable to deduct expenses from your taxable income. Besides that, you will be audited and tarnish the reputation of your company.
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