Tax Questions

What are the IRS penalties?


The IRS assesses penalties on various tax returns for noncompliance of the tax laws. Below are common IRS penalties.


Failure to file tax return penalties

The failure to file tax return penalty is hefty. It is much better to file your tax return and not pay the taxes due than to not file a tax return. You can always file a tax return then go back and file an amended tax return if the original tax return was incorrect. The IRS penalty for failing to file tax return is 5% per month, up to a maximum penalty of 25%


Failure to pay taxes penalties

Some taxpayers just don't have enough money to pay the IRS for the taxes due. If you owe taxes and cannot pay, you should file your tax return and not pay your taxes due. There are much less tax penalties and interests for not paying taxes due than not filing tax returns to begin with. The IRS penalty for not paying taxes is 0.5% per month up to 25% max, which is much less than the penalty for not filing tax return.


Negligence penalties

A negligence penalty of 20% is imposed if any of the underpayment was for intentional disregard of rules and regulations without intent to defraud.


Fraud penalties

Various fraud penalties may be imposed for deliberate action to deceive the IRS such as misrepresentation, concealment and intentionally defrauding the IRS. Fraud penalties are the worst penalties assessed by the IRS.