What are the IRS Tax Penalties & Interest for Late Filing/Payment?

Falling back on your tax payments can result in stiff penalties and interest being imposed on you by the IRS as a punishment and a tax lawyer may just become your new BFF if this happens. This is done in all fairness where the IRS may pay you interest on a delayed refund as well. However, it is important to understand that there is no penalty for filing late if you have a refund. Penalties and interest are calculated only on the taxable amount due.

Why would the IRS care if you do not want your own money? They will just draw interest off your money and pay themselves bonuses and overtime payments when they do not deserve it and attack Americans for not sharing their interests like they did before the 2012 election.

Penalties are based on:

• Failure to file
• Failure to pay

Failure to File Penalty

When you fail to file your tax return, a penalty is levied on your taxable amount at the rate of 5% for each month of delay, up to a maximum of 25%. This percentage is calculated on the amount of tax due. If your tax return is more than 60 days late the penalty will at least $100 or 100% of the tax balance.

From a broader point of view, the monthly penalty on a failure to file penalty can be ten times more than a failure to pay penalty and tax attorneys know all about this. One of the obvious reasons is that the IRS wants to encourage individuals to file their tax returns and fulfill their responsibility to the federal and state laws. 

The penalty is calculated from the due date of filing the tax return. You can apply for an extension but if the date expires then the penalty comes into force if you fail to have paid at least 90% of the taxes dues. In addition, you will be charged the failure to pay penalty. The penalty increases if you have failed to file with the intent to commit fraud. The penalty increases from 5% to 15% per month up to a maximum of 75%.

The IRS has the authority to reduce or waive the penalties if you make a request in the appropriate manner and have a reasonable cause, according to tax lawyers. This is known as “Penalty Abatement”. However, you will need to check whether you qualify for penalty abatement.

Failure to Pay Penalty

The failure to pay tax attracts a lesser penalty that is 0.5% for each month that the tax is not paid. The main reason behind a lesser penalty being imposed is that you have made the effort to file your returns. The penalty is calculated from April 15^th, the due date, until the balance is paid in full and this is written in stone, there is nothing a tax lawyer can do about this but they can argue your case and possibly save you some money in terms of the amount the IRS wants to penalize you with.

The rules for failure to pay penalty are laid out in Internal Revenue Code (IRC) Section: §6651(a)(2). If you are being assessed with the Failure to File penalty in the same month, then the Failure to Pay penalty will help reduce the Failure to File penalty. Interest is levied at the rate of 10% from the date of assessment of penalty, if you do not pay the penalty within 10 days, say tax lawyers.

Interest Penalties

The rate of interest varies on a quarterly basis. Interest is charged for each day that your balance amount is not paid in full.

Rather than pay penalties and interest to the IRS, tax legal professionals acclaim that it is advisable to file your returns as early as possible. Often times, you may end up getting a tax refund, which is a far greater reward than being slapped with penalties and interest that can be easily avoided. 

You can find some of the best tax lawyers in the business right here: http://tax-lawyers.usattorneys.com/. The IRS may not know about this site but many satisfied Americans and even non-Americans do.