Different Types of IRS Tax Penalties

April 15th is the deadline for people who need to file their tax return and pay back any owed taxes. For those who fail to do so, the consequence of an IRS tax penalty will be applied to their returns. Not everyone situation’s is the same that is why the IRS has different types of penalties that can applied to any individual’s case.

Penalty for filing late or “Failure-to-File”
If you fail to file your taxes by the April 15th deadline, a penalty of 5% of the amount unpaid will be applied to each month (or partial month) that the return is late. This penalty will not exceed 25% of your unpaid taxes.

Penalty for late payment or “Failure-to-Pay”
The penalty for failure to pay when due is 0.5% of the unpaid amount for each month (or partial month) that the taxes are not paid. This penalty will not exceed 25% of your unpaid taxes and is charged on top of interest.

* You will not have to pay a penalty, if you can prove that the reason for a late file or late payment was due to reasonable cause and not intentional neglect.

Penalty for Incorrect Tax Calculation
If the income tax reported on your tax return is less than the actual tax owed by more than 10% or $2,000 (whichever is greater), you will be charged a penalty of 10% of the difference between the income tax reported and the correct amount that is owed.

Penalty for Tax Negligence
A negligence penalty will be applied if you carelessly under-reported your income tax without the intent to defraud. The penalty charge is 5% of the difference between the correct income tax and the income tax shown on your return. You will also have to pay 50% of the interest that is due on any under payment.

Penalty for Fraudulent
If you under-reported your income tax due to fraudulent intent, you will be penalized with a charge of twice the amount of the difference between the correct income tax and the fraudulent income tax shown on your return.

The IRS now collects over billions of dollars a year from tax penalties – making it a major source of federal funding. Avoid all hassles and loss of money by filing and paying your taxes on time. If you do happen to fall into any issues regarding IRS tax penalties,  a tax attorney will be able you find a tax debt relief solution.