| So you didn't file your tax returns or filed them late and | | | | disregarding or negligence of rules. Taxpayers who |
| you're wondering what penalties you'll have. Here are | | | | can show reasonable cause for filing incorrect returns |
| some of the most common IRS tax offenses and the | | | | may not have to pay the penalty. |
| penalties that go along with them: | | | | - Offense: Incorrect social security and other |
| - Offense: Late filing | | | | identification numbers |
| Penalty: 5% per month of net tax due up to 25% for | | | | Penalty: $50 each time it happens. |
| late filing. If the tax return is more than 60 days late, | | | | Taxpayers may also have to pay interest based on |
| the minimum penalty is $100 or 100% of tax owed, | | | | how much tax they owe. The interest is added for |
| whichever of the two amounts is less. Taxpayers | | | | every day the balance is not fully paid. Rates change |
| who can show reasonable cause for filing late may | | | | but often fall around 6% a year. |
| not have to pay the penalty. | | | | This is a list of basic tax-related penalties. Other types |
| - Offense: Unpaid taxes | | | | of IRS tax penalties exist. For information on penalties |
| Penalty: ½ to 1% of unpaid taxes for each | | | | that may not be listed here as well as how to get rid |
| month or part of a month after the tax due date. | | | | of IRS tax penalties, contact a tax problem resolution |
| Penalty doesn't apply during the extension period and | | | | firm for help. |
| can't exceed 25% of the unpaid tax. Taxpayers who | | | | Whether you pay the penalties or try to reduce them, |
| can show reasonable cause for not paying may not | | | | be sure to do something because aside from |
| have to pay the penalty. | | | | fee-based penalties, taxpayers may have to go to trial |
| - Offense: Fraud | | | | which can lead to jail time for offenses like not filing |
| Penalty: 15% for each whole and part month. | | | | returns, evading taxes, not paying full taxes, fraud, false |
| Maximum penalty is 75%. | | | | statements, or not supplying correct information. |
| - Offense: Frivolous tax return | | | | No tax penalty is given if written advice from an IRS |
| Penalty: $500 for not including enough information to | | | | official is wrong, but you need to show that you gave |
| calculate the correct tax, if the return includes an | | | | accurate tax info to the IRS when you asked the IRS |
| incorrect tax amount because of a frivolous position | | | | for tax advice. If you can show that your mistake was |
| on the taxpayer's behalf, or if the taxpayer tries to | | | | an honest error, the IRS may drop the tax penalty. To |
| interfere or delay administration of federal income tax | | | | show the IRS that your mistake was an honest error, |
| laws. Penalty is in addition to other penalties the law | | | | send the IRS a check for payment of tax and interest, |
| might call for. | | | | a letter explaining how the mistake was made, and a |
| - Offense: Inaccurate tax returns | | | | request to get rid of the penalty. Keep in mind, |
| Penalty: Maximum penalty of 20% for underpayments | | | | however, that it can be difficult to get tax penalties |
| that greatly understate income tax (underestimating by | | | | removed, especially without a tax professional at your |
| at least $5,000 or 10% of the correct tax) or | | | | side. |