IRS Penalties

IRS Notices and Bills, Penalties, and Interest Charges

April 15 is the deadline for most people to file their individual income tax returns and pay any tax owed. During its processing, the IRS checks for mathematical accuracy on your tax return. When processing is complete, if you owe any tax, penalty, or interest, you will receive a bill.

Generally, interest accrues on any unpaid tax from the due date of the return until the date of payment in full. The interest rate is determined quarterly and is the federal short-term rate plus 3 percent. Interest compounds daily.

In addition, if you file a return but don’t pay all tax shown as due on time, you will generally have to pay a late payment penalty. The failure to pay penalty is one-half of one percent for each month, or part of a month, up to a maximum of 25% of the amount of tax that remains as unpaid from the due date of the return until paid in full. The one-half of one percent rate increases to one percent if the tax remains unpaid 10 days after the IRS issues a notice of intent to levy property.

If you file your return by its due date and request an installment agreement, the one-half of one percent rate decreases to one-quarter of one percent for any month in which an installment agreement is in effect. Be aware that the IRS applies payments to the tax first, then any penalty, then to interest. Any penalty amount that appears on your bill is the total amount of the penalty up to the date of the notice, not the penalty amount charged each month.

If you owe tax and don’t file on time, there is a penalty for not filing on time. The failure to file penalty is usually five percent of the tax owed for each month, or part of a month that your return is late, up to a maximum of 25%. If your return is over 60 days late, there is also a minimum penalty for late filing; it is the lesser of $205 or 100 percent of the tax owed unless your failure to file was due to reasonable cause and not willful neglect.

You must file your return and pay your tax by the due date to avoid interest and penalty charges

Is There Anything I Can Do To Get My Life Back?

Yes there is! You can get your life back. First you have to decide that you want your life back. You have to decide that you aren’t going to take this anymore and that you want to fix it. Once you make the decision that you want help, and you no longer want to live in fear, or hide from those dreaded IRS notices, phone calls and visits—you will have taken the biggest step in getting your life back on track. Don’t let the IRS bully you into hiding under a rock, in the closet, or under your blankets. There are many options and ways to get your life back—and even better yet, there’s a way to protect your savings and your paycheck, a way for you to keep your car!