Friday, April 17, 2009

IRS Tax Penalties

Any way you dice it a penalty is not a good thing. Webster’s dictionary defines a penalty as a “disadvantage, loss, or hardship due to some action.” This definition is completely accurate when it comes to IRS tax penalties. The IRS can and will impose two types of penalties on taxpayers all depending on the taxpayer’s situation.

If a taxpayer files so much as one day after April 15th without filing an extension to file the IRS will penalize the taxpayer 5% of the amount of tax owed per month for 4 ½ months if the tax is not paid within that time period. That adds up to 22.5%! This is the dreaded Failure To File penalty.

If a taxpayer owes taxes and does not pay what they owe by April 15th the IRS will charge ½ of 1% of the amount of the taxes owed per month. This amount will increase to a full 1% if the taxpayer is in collections, but will be reduced to ¼ of 1% if the taxpayer gets into an installment agreement with the IRS. This penalty is known as the Failure To Pay penalty.

The penalties on back taxes can be devastating and needs to be addressed as quickly as possible to prevent the taxpayer from suffering loss or causing some other type of financial hardship. The key is to take action. Call a tax professional immediately and stop the pain!

1 comment:

Darwin Smith said...

This is a best way to know about IRS tax. Thanks for the information....

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