Hans Kasper, MS-CPA, PS

Assessed when a return is filed after its due date or after extensions to file have lapsed. Lapses of extension are treated as if they were never filed and penalty is calculated from the original due date.

Failure to pay tax by the due date of the return excluding extensions penalty.

0.5% per month for up to 50 months or a part thereof on balance of unpaid taxes for a maximum of 25.0%. Penalty increases to 1% per month when an intent to levy is issued.

Assessed when a return is filed after its due date even if an extension has been filed. This penalty does not apply during the automatic 4 month extension period, if you paid 90% of tax due by the original due date of the tax return.

File return more than 60 days after due date penalty.

Minimum penalty is the smaller of $100 or 100% of tax due.

Interest on tax due not paid by the due date of the return

Varying rate, as set by Congress, per month until the tax is paid in full on the balance of unpaid taxes.

Assessed when a return is filed after its due date even if an extension has been filed.

Example 1: John has tax due of $10,000 on his return and files the return on November 15th after the second extension has lapsed on October 15th.

Tax due		$10,000
Failure to file	5 months max for 22.5%	$2,250
Failure to pay	7 months for 3.5%	$350
Interest	7 months at about 0.5% per month for 3.5%	$350
Total due	Total penalty 29.50%	$12,950

Example 2: John has tax due of $10,000 on his return and files the return on September 15th before the second extension has lapsed on October 15th.

Tax due		$10,000
Failure to file	None	0
Failure to pay	5 months for 3.5%	$250
Interest	5 months at about 0.5% per month for 3.5%	$250
Total due	Total penalty 5.0%	$10,500

Example 3: John did not file his tax return four years ago. He owes $10,000 on his return.
Tax due		$10,000
Failure to file	5 months max for 22.5%	$2,250
Failure to pay	48 months for 24.0%	$2,400
Interest	48 months at about 0.5% per month for 24.0%	$2,400
Total due	Total penalty 70.5%	$17,050

Penalty	Calculation	Additional Information
Failure to deposit employer payroll taxes penalty by the monthly or semi-weekly deposit due dates	2% - Deposits made 1-5 days late. 5% - Deposits made 6-15 days late. 10% - Deposits made 16 or more days late. 10% - Amounts paid within 10 days of the date of the first notice the IRS sent asking for the tax due. 15% - Amounts paid after 10 days of the date of the first notice the IRS sent asking for the tax due.	Assessed when payroll taxes deposited at an approved financial institution are not paid timely. If a company's payroll taxes are not paid, the IRS can assess at the personal level the owner, officer, accountant, or bookkeeper of a business with a penalty equal to the income taxes, social security taxes, and medical taxes withheld from employees' payroll checks.
Failure to pay estimated taxes penalty on income tax return.	Ranges between 8% and 10% on an annualized basis for the period up to the due date of the return.	Income tax return filers who owe more than $1,000 on their return may be subject to this penalty. The tax payments are to be made quarterly on 4-15, 6-15, 9-15, and 1-15. Exemptions are available.
Accuracy related penalties	20% of underpaid tax.	If due to negligence, willful disregard of rules, or an understatement of tax due by the larger of 10% or $5,000. The term "negligence" includes a failure to make a reasonable attempt to comply with the tax law or to exercise ordinary and reasonable care in preparing a return. It also includes failure to keep adequate books and records.
Frivolous return penalty	$500	Totally ridiculous return is filed and language in the oath-signature area is struck out.
Fraud penalty	Up to 75% of tax due.	Fraudulent filing of a tax return. Real excesses in this area may include having to pay substantial criminal legal defense fees and jail time.
Failure to supply social security number	$50	Usually applies to W-2 and 1099 forms.
REFUND PENALTY	Your entire refund	If you do not file your tax return (the IRS has it in their hands) within 3 years to the day of its original due date INCLUDING EXTENSIONS, you will lose your refund.
PENALTY ABATEMENT		Some of your penalties may be able to be abated if you have reasonable cause. Please contact us regarding this matter.

This list does not include all of the penalties that the IRS might assess under varying facts and circumstances.

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This page was last updated on 05/13/2010

Hans Kasper, MS-CPA, PS

Tax Penalties

Internal Revenue Service Penalties and Interest

Internal Revenue Service
Penalties and Interest