All taxpayers are aware that non-compliance with IRS requirements and deadlines result in having to pay penalties. The IRS imposes penalties for late filing of tax returns and also imposes penalties for late payment of tax. In addition to penalties, the IRS charges taxpayers interest on unpaid IRS taxes.
Penalty for Failure to File Return
The penalty for failure to file is computed based on the time from the final deadline of the tax return up to the actual date the tax return is filed. The IRS imposes a 5% penalty for each month or part of the month that the tax return is late up to a maximum of 25%. If you still fail to file your return more than 60 days after due date, the IRS charges a minimum penalty of $135 or 100% of the unpaid tax, whichever is lower.
Penalty for Failure to Pay
The IRS imposes a .5% late payment penalty for any portion of the tax that is unpaid as of the date the payment is due. As with the penalty for failure to file, the penalty for late payment cannot exceed 25% of net amount of tax due.
Interest
The IRS also charges interest for any tax that is unpaid from the time that the payment of the tax was due up to the actual date of payment. The applicable rate of interest which approximately 3% is set by the IRS every three months. This interest is calculated for each day the tax balance, late filing and late payment penalties are not paid in full.
If you have not filed your return or paid your taxes for several years, just reading how penalties and interest are calculated may intimidate you. How will you manage to pay your back taxes including the penalties and interest? Seek the help of tax relief services in the District of Columbia. This is a team of tax attorneys who can help you deal with the IRS. Your tax relief service may be able to get penalties waived or the amount of taxes owed may be reduced if possible. Tax attorneys know how to apply and qualify you for an IRS installment agreement based on your approval and acceptance. They are the tax relief experts who can help you finally settle your long overdue taxes.
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