Estate Planning and Tax Lawyer Blog

The Internal Revenue Service can assess a penalty if you fail to file, fail to pay or both when filing a tax return. The IRS has eight important points it would like to convey to taxpayers about penalties you may face if you do not pay timely or do not file. You may receive a failure-to-file penalty if you do not file your tax return by the deadline. You may receive a failure-to-pay penalty if you do not pay by the deadline. The failure-to-file deadline is generally greater than the failure-to-pay penalty. Even if you are unable to completely pay the taxes you owe, still file your tax return on time. The IRS will work with you to determine payment options for you. For filing late, the penalty is generally 5% of the unpaid taxes each month or part of a month that a tax return is late, to not exceed 25% of your unpaid taxes. The minimum penalty for filing your tax return more than 60 days after the deadline or extended due date is the smaller of $135 or 100% of the unpaid tax. You will usually have to pay a failure-to-pay penalty of ½ of 1% of your unpaid taxes for each month or part of a month after the deadline if you do not pay your taxes on time. This penalty could be up to 25% of your unpaid taxes. If a request for an extension of time has been timely filed and you paid at least 90% of your taxes by the filing deadline, you will not receive a failure-to-pay penalty if the remaining balance is paid by the extended deadline. If both penalties apply in any month, then the 5% penalty is reduced by the failure-to-pay penalty. The minimum penalty is small of $135 or 100% of your unpaid taxes if you file your return more than 60 days after the filing deadline or extended deadline. If you show that you failed to pay or file on time due to reasonable cause and not because of willful neglect, then you will not have to pay a failure-to-pay or failure-to-file penalty.