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IRS tax penalties are extremely common, and can mount if they begin to run for consecutive terms. There are various types of penalties, but all result in one thing - less money for you. The most common penalties used by the IRS are:
- failure to file
- and failure to pay penalties.
Both types of tax penalties can substantially increase the debt you owe to the IRS, and can do it very quickly. Moreover, the IRS also charges interest on these penalties.
An additional note which is important to the process of levying penalties is the fact that most taxpayers do not find out about issues with the IRS for some number of years after the problematic return was filed. This means that retroactive penalties, coupled with their interest charges, can be very tough.
The current tax penalties for various infractions can be seen in a table below:
| Infraction | Tax Penalty |
|---|---|
| Late Filing (If your IRS tax return is more than 60 days late, the minimum IRS tax penalty is the smaller of $100 or 100% of the tax owed.) |
5% per month of the net tax due the IRS (maximum 25%) |
| Late filing with the IRS due to fraud | 15% per month of the net tax due the IRS (maximum 75%) |
| Late tax payments to the IRS | 0.5% per month of the unpaid tax due the IRS (maximum 25%) (The 0.5% rate increases to 1% after the IRS issues an IRS tax notice of intent to levy) |
| Negligence or disregard of IRS tax rules and IRS tax regulations | 20% of tax underpayment due the IRS |
| Fraud | 75% of tax underpayment due the IRS |
| Substantial understatements of income tax (tax underpayments that exceed the greater of 10% of the correct tax liability or $5,000) |
20% of tax underpayment due the IRS |
| Over valuations of 200% or more but less than 400% of the correct amount | 20% of tax underpayment due the IRS |
| Over valuations of 400% or more of the correct amount | 40% of tax underpayment due the IRS |
| Estate tax and gift tax under valuations of 50% or more of the correct valuation and if the tax underpayment exceeds $5000 | 20% of tax underpayment due the IRS |
| Estate tax and gift tax under valuations of 75% or more of the correct valuation and if the tax underpayment exceeds $5000 | 40% of tax underpayment due the IRS |
Interest, compounded daily, is charged on any unpaid tax from the due date of the tax return until the date of tax payment. The interest rate is the federal short-term rate plus 3%. That rate is determined every three months.
Current IRS tax penalties can be as high as 75% of the total original taxes owed. This often means that in some cases a taxpayer can afford to pay the original taxes, but not the penalties. Los Angeles Tax Attorneys specialize in negotiating with the IRS to reduce or remove these penalties. Contact us here for a free consultation.
Get you tax penalties abated with Los Angeles Tax Attorneys!
Related content about irs penalties or tax abatement can also be viewed at tax related websites
Tax Help at Law Offices of Alex Gluzman:
- IRS problem resolving
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- Online tax service
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When the State Board of Equalization Audited my Los Angeles automotive business in 1994, the auditor presented us with a bill for roughly $45,000.
By the time I hired Alex Gluzman, the bill ballooned to about $70,000. I was honestly scared.
Finally we got a ruling in our favor and I ended up paying only $10,000.
This is my story and I am sure I am not the only one.