Common Penalties For Failure To Pay Taxes

Jan 26, 2015 By Evan Nielsen In Taxation No Comment Tags : , ,

If you fail to pay your tax liability as it becomes due, you will be assessed fines and penalties until you do pay. If the failure persists for several years, the fines and penalties assessed quickly add up to a significant amount. The best way to avoid accumulation of high fines and stiff penalties is to act quickly to repay the taxes you owe. The IRS will be willing to work with you, but you have to contact them and initiate the process. Dealing with the IRS can be frustrating and difficult for the average taxpayer. Fortunately, experienced tax resolution attorneys are here to help assist and act on your behalf.

Before making any offer or initiating any communication with the agency though, you should first have a basic understanding of the common penalties that may be imposed. Some different types of tax penalties are as follows:

  • The penalty for failing to file taxes is between 5% per month to a maximum of 25% of what you owe.
  • The penalty for failing to pay the taxes you owe is 0.5%, and is based on the amount due as shown on your income tax return.
  • You can be fined an additional 20% of the amount due, for any additional amount owed on an inaccurate return.
  • For fraudulently filed returns, the penalty is a whopping 75% of the amount due.

You can challenge some of these penalties, but must be able to show “reasonable cause” for elimination of the penalty. This might include an honest mistake, or reliance on tax advice from a qualified tax preparer. What the IRS will or will not consider reasonable cause varies from cases to case, and the tactic of placing blame on your accountant is accepted less frequently than one might imagine. To make sure you present a clear case, call a tax resolution attorney for help.

One important area where penalties can often be waived is when your LLC filing as a partnership files late. If certain criteria are met, these penalties can almost always be waived on proper request. The key is to highlight the right things and make the request in a proper manner.

For answers about tax penalties and how to avoid them, call our office for assistance. Let the professionals at Nielsen Law Group help you negotiate with the IRS. Call (480) 888-7111 or submit a web request here.