Miss the Final Oct. 15 Tax Deadline? Here's What You Must Do

Bonnie Lee for DailyFinance writres: According to the IRS, more than 12 million individuals requested the automatic six-month extension. Whether all of them complied and filed to hit their new deadline is another matter. If you missed the deadline for filing, you will be penalized unless you fall into the following categories:

1. You are a member of the military or others serving in Afghanistan or other combat zone. You are granted an additional 180 days after leaving the combat zone to both file returns and pay any taxes due.
2. People with extensions in parts of Colorado affected by severe storms, flooding, landslides and mudslides have until Dec. 2, 2013 to file and pay.

Not having the funds to cover your tax liability is not a viable excuse for not filing a return. Not only will you incur a failure-to-pay penalty if you fail to file a return, but you will also suffer a failure-to-file penalty. If you owe money to the IRS, immediately file the tax return to minimize the failure-to-file penalty.

According to the IRS, the failure-to-file penalty is generally more than the failure-to-pay penalty. You can reduce additional interest and penalties by paying as much as you can with your tax return. Try for a loan or file IRS Form 9465 to set up an installment agreement to make payments. The IRS will work with you.

Through the Fresh Start Program, taxpayers can set up a payment agreement with the IRS online within a matter of minutes. If you owe less than $50,000, simply go to Individuals Online Payment Agreement Application and follow the step-by-step process to set up a payment plan.

The penalty for filing late is normally 5% of the unpaid taxes for each month or part of a month that a tax return is late. That penalty starts accruing the day after the tax filing due date and will not exceed 25% of your unpaid taxes.

The Fresh Start Program is also designed to allow taxpayers suffering undue hardships to skip payment of taxes while they get their lives back in order. Simply contact the IRS and ask to be deemed currently noncollectable. You will be required to provide information about your finances in order for them to evaluate your request.