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Posts Tagged ‘IRS Tax Penalties’

If you do not file your return and pay your tax by the due date, you may have to pay a penalty. Below is a summary of IRS tax penalties that you might have to pay. It is important to understand what IRS tax penalties there are so that you can try to avoid having to pay them.

When will tax penalties be assessed?

The following circumstances can lead to tax penalties:

• you substantially understate your tax,
• you understate a reportable transaction,
• you file an erroneous claim for refund or credit,
• you file a frivolous tax submission, or
• you fail to supply your SSN or individual taxpayer identification number.

These penalties are civil penalties but there is also a fraud penalty.

When will there be an IRS fraud penalty?

If you provide fraudulent information on your return, you may have to pay a civil fraud penalty.

Summary of IRS tax penalties

Filing late – Failure to File Tax Penalty

If you do not file your tax return by the due date (including extensions), you may have to pay a failure-to-file penalty. The penalty is usually 5% for each month or part of a month that a return is late, but not more than 25%. The penalty is based on the tax not paid by the due date (without regard to extensions).

Fraud – Fraud Penalty

If your failure to file is due to fraud, the penalty is 15% for each month or part of a month that your return is late, up to a maximum of 75%.

Very Late Returns (Return over 60 days late)

If you file your return more than 60 days after the due date or extended due date, the minimum penalty is the smaller of $135 or 100% of the unpaid tax.