Posted On: November 30, 2011 by Mitchell A. Port

Penalties And Interest Paid To The IRS

The total penalty for the failure to file your income tax return and for failing to pay your taxes can be 47.5% (22.5% late filing, 25% late payment) of the tax owed. On top of penalties, there’s interest charges.

Interest charges for filing and paying taxes late

Interest is compounded daily and charged on any unpaid tax from the due date of the return (without regard to any extension of time to file) until the date of payment.

The interest rate is the federal short-term rate plus 3 percent. That rate is determined every three months.

Penalty charges for filing and paying taxes late

In addition, if you didn't pay on time, you'll generally have to pay a late payment penalty.

Paying Late

The late payment penalty is one-half of one percent of the tax (0.5%) owed for each month, or part of a month, that the tax remains unpaid after the due date, not exceeding 25 percent.

The one-half of one percent rate increases to one percent if the tax remains unpaid after several bills have been sent to you and the IRS issues a notice of intent to levy.

Currently, if you filed a timely return and are paying your tax via an installment agreement, the penalty is one-quarter of one percent for each month, or part of a month, that the installment agreement is in effect.

Filing Late

If you did not file on time and owe tax, you may owe an additional penalty for failure to file unless you can show reasonable cause.

The combined penalty is 5 percent (4.5% late filing, 0.5% late payment) for each month, or part of a month, that your return was late, up to 25%.

The late filing penalty applies to the net amount due, which is the tax shown on your return and any additional tax found to be due, as reduced by any credits for withholding and estimated tax payments.

After five months, if you still have not paid, the 0.5% failure-to-pay penalty continues to run, up to 25%, until the tax is paid.

Ask for tax help from a qualified California tax attorney. Call Mitchell A. Port at (310) 559-5259.