Delinquent Tax

Do you know what the term “delinquent tax” means? Do you know how making a delinquent tax return can affect the ownership of property along with your credit rating?

According to the federal government, a delinquent income tax return is a late payment after April 15 (when income tax is due). If you applied for an extension on your income tax, a payment made after your extension date is also seen as a delinquent tax return.

Making delinquent tax returns is not a habit you want to get into. It can have a major impact on the way you own real estate and personal property and will also affect your credit rating.

Each state has its own procedure when it comes to delinquent property tax. Generally, if you have not paid your property tax by the given date, you will incur a three to five percent penalty which will be added to your taxes. Many state authorities will advertise the properties against which delinquent taxes are due in local newspapers. The cost of this will be added to your tax bill. If you do not meet the new payment deadline, your local authority will generally issue a tax certificate sale against your property, forcing you to sell it in order to pay your tax bill.

If you have incurred charges for delinquent tax in previous years, you will have some hefty penalties to pay. For example, a failure to file penalty is usually charged at 5 percent, while a failure to pay penalty can be charged at 25 percent of your property's value.

If you are unable to pay your tax bill or if you refuse to, your local authority has the right to seize your property, access your wages in your bank account to take what they need, and refer your case to a debt collection agency. For this reason, you need to stay on top of your taxes and budget for them accordingly. You should also make sure you always file before the due date.