Happy Tax Day Eve! As your tax-filing window rapidly closes, the potential for last-minute foul-ups ramps up. Some advice? Doug Dachille of First Principles Capital Management, told our Daily Ticker Team how important it is to get things right. But, inevitably, people will screw up -- some by mistake, some intentionally, some to their own detriment, and some to the detriment of others.
Here are some facts and figures around tax-related bungles -- be they carefully crafted or coincidental -- that are avoidable.
Penalty for not filing: 5%
Taxpayers who don't file their taxes or ask for an extension by midnight Tuesday will get hit with a penalty of about 5% per month based on their unpaid balance. So unless you're asking for an extension, you should file even if you can't pay the full amount due. And that's what the IRS recommends. You can get extra time through the Free File link on IRS.gov.
[Related: Don't Lend Uncle Sam Money at Tax Time]
Unpaid "Tax Gap": $450 billion
Around 83% of people are voluntarily "compliant" in paying their taxes on time, according to the IRS. The rest are responsible for the so-called "tax gap," the amount of tax liability faced by taxpayers that is not paid on time. Earlier this year, the IRS released its first update on the tax gap in five years, which reflects 2006. These data take years to be released, unfortunately, but the trend is clearly up, in line with growth in tax liabilities. Most of that gap -- an estimated $376 billion of the $450 billion gross gap for 2006 -- was due to the underreporting of income. For perspective, the gross tax gap in 2006 was equivalent to about 5% of the national debt. Underpayment accounted for $46 billion and non-filing accounted for $28 billion.
IRS criminal investigations that are tax-related: 56.8%
Of the 4,720 criminal investigations initiated by the IRS in 2011, 2,862 of them, or 56.8%, were tax-related. There were 1,610 tax cases recommended for prosecution and 1,162 sentenced. Sentencing involves confinement to federal prison, halfway house, home detention, or some combination thereof. Across all criminal investigations, 81.7% were sentenced to prison. To get an idea of the penalty, those sentenced in the second quarter of 2012 had an average 44 months to serve.
Increased likelihood of a car wreck: 6%:
Whether you like it or not, tax procrastinators are putting you at greater risk, too. The odds of getting into a fatal car crash increase by 6% on tax filing day, according to a study published in the Journal of the American Medical Association. One of the authors of the study, Dr. Donald Redelmeier, told CNNMoney that less sleep, more alcohol use, irritability, and the unwanted distraction of filing taxes could all contribute to the jump in accidents. The study, which focused on the 6,783 people who died in car crashes in the U.S. over the last 30 years, found a nationwide average increase of 13 fatalities on Tax Day, compared with the week before and after. Obviously this impacts everyone on the road -- not just those who waited till the last minute.