Tax Penalties & Interest: IRS Tax Penalty Details For Many Situations

The IRS charges penalties as a way to scare taxpayers into keeping in compliance with their tax filings and tax payments. The IRS has penalties for just about everything. In fact, there are over 140 different penalty provisions that the IRS uses.The IRS will also charge interest on any past due tax amount. There are various types of penalties that all vary in amount and they typically increase with the severity of the infraction. Below are the common IRS penalties that are charged.

Failure to Pay & Underpayment Tax Penalties & Interest

Out of all of the IRS penalties, this one is the least, but can still add up to quite a bit overtime. Typically if taxes are not paid on time or they are underpaid then there will be a penalty of 1/2% of the outstanding tax amount for each month that passes and will continue to accrue until it is a maximum of 25% of the total tax owed (penalty can be up to 1% if tax remains unpaid for 10 days after an intent to levy is issued and can be as low as 1/4% if the taxpayer enters into an installment agreement) .

IRS Failure to File Penalty: Penalties for Not Filing a Tax Return

The IRS considers not filing worst than not paying your taxes, for this reason they have a much steeper penalty for unfiled tax returns. The penalty for a late filing is 5% per month on the total amount of taxes due to the IRS. This penalty can reach a maximum of 25% of the total amount of taxes owed and could be more than that if you add in the additional interest that will also be charged.

IRS Tax Fraud & Negligence Penalties

As a working resident of the United States you are required by law to accurately and truthfully fill out a tax return each year to determine the amount of taxes that you owe. The IRS has harsh punishments and penalties for those individuals that do not follow the law and try to commit tax fraud when filing their return. Sometimes the IRS realizes that honest mistakes are made and consider it negligence, which still comes with its own steep penalties. There are many varying levels of fraud and different penalties and punishments that are given by the IRS. Tax fraud is the most severely punished and penalized tax infraction. The penalties for tax fraud can go up to several hundred thousand dollars and can also result in up to 5 years in prison.

Accuracy Related Tax Penalties

The accuracy penalty is a common penalty that is used by the IRS and it is typically charged when the IRS audits a taxpayers return and finds that the tax return understated the tax liability. The accuracy penalty that is typically imposed is 20%.

Penalty Abatement Service and Help

Have tax penalties that you want removed? Understand how penalty abatement service works and talk with a tax professional to determine if you can have your tax penalties removed.