• February 13, 2017
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Late payment is not the only condition when the IRS penalizes tax holders. The central tax authority may also penalize those who file their taxes after the deadline. If you owe taxes, and fail to file them in time, it may lead to interest and penalties. However, if you are due for a refund and fail to timely file your tax return, there will be no penalty from the IRS. This blog post discusses five facts about late tax filing and payment penalties every taxpayer must know. Take a look.

1. Possibility of Two Penalties

The first important fact that all taxpayers need to know is that, if you owe any tax when filing a late tax return, the IRS may charge you with two penalties. First, they may charge you with the “failure-to-file” penalty for late filing, and second, the “failure-to-pay” penalty for not settling your pending taxes before the due date.

2. Late Filing Penalty

Applicants who file their tax returns after the due date are charged with a penalty of 5 percent per month. Although this amount accrues every month, it doesn’t exceed 25 percent of the tax holder’s total unpaid taxes. If the applicant files the tax return 60 days after the due or the extended due date, the failure-to-file penalty is 100 percent of the total unpaid taxes or $135, whichever is smaller. If a person’s total unpaid taxes, for instance, are $200, and they file the tax return 60 days after the deadline, the failure-to-file penalty would be $135.

3. Late Payment Penalty

The late payment penalty is usually 0.5 percent of the debtor’s total unpaid taxes. The amount, like the late filing penalty, accrues every month after the due date for tax payment. The payable amount can go up to a maximum of 25 percent of the total unpaid taxes. Furthermore, the taxpayer might also be liable to bear interest rates, if they fail to settle their due balance in full. During FY 2016-2017, the interest rate for underpayment of taxes is 3 percent.

4. Combined Penalties Per Month

If the IRS finds a taxpayer guilty of both the penalties – “failure-to-file” and “failure-to-pay” – the maximum penalty for one month is usually 5 percent of the total unpaid taxes. Whether the IRS charges the debtor with both these penalties varies from case to case. Here are two examples:

Case (A)

You filed a tax return, but expect a refund

  • No penalties
  • You’d have 3 years from the year you didn’t file a tax return to claim your refund. After that period, the refund money will go to the government

Case (B)

You filed a tax return on time, and owe unpaid taxes

  • Failure-to-pay penalty may apply
  • The minimum penalty would be 0.5 percent and the maximum 25 percent of the total unpaid taxes

5. Exceptions to Late Payment Penalty

If an applicant has paid 90 percent of their taxes and requests an extension of the due date for filing their income tax return, the IRS may exempt them from failure-to-pay penalty. The debtor, however, will have to bear interest charges on the unpaid taxes, if they file their tax return after April 15 during the current financial year.

6. Situations for No Penalties

A taxpayer can avoid failure-to-file and failure-to-pay penalties, if they are able to prove there was a justified reason for not paying their taxes. If the person, for instance, has been a victim of a flood, storm, or any other natural calamity, they will not have to bear any late filing or late tax payment penalties.

The Takeaways

Even if a person does not have the means to pay their taxes in full, they need to file their tax return every year. That is because the “failure-to-file” penalty can be up to 10 times more than the “failure-to-pay” penalty. Moreover, taxpayers can also request a payment agreement with the IRS to settle their tax liabilities and avoid penalties. To learn more about how to avoid tax penalties or address any other IRS tax debt issues, please call the Law Offices of Nick Nemeth at (972) 426-2553, or fill out our contact form.

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What Our Clients Have to Say

Brent VahleBrent Vahle
19:13 02 May 24
I called to see if they could help reduce some penalties and fees. The person I spoke with told me it might be counterproductive for them to take my case since their feels would likely equal the amount of penalty/interest abatement. I decided to pass on moving forward but was so happy to hear a legal team, or any business for that matter, who has that much integrity. I feel most others would likely try to take my money anyway. I hope I never have to go through this again, but if I do, I will definitely use the Law Offices of Nick Nemeth!
Jason WinkleJason Winkle
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Jaime Flores was very friendly, professional, and knowledgeable. She gave me some very valuable information which helped guide me with a plan of action. The free consultation is very much appreciated.
Matthew SwigartMatthew Swigart
12:14 02 May 24
Great attorney who was able to provide quick and useful advice. Although my situation did not warrant their services, they still took the time to discuss solutions I could explore. I highly recommend visiting this office!
Tony PantojaTony Pantoja
12:57 09 Apr 24
Very professional and very knowledgeable, Jamie Flores was very straight forward and professional, a firm that doesn’t just take your money, Thanks
Carla AtwalCarla Atwal
10:52 02 Apr 24
Nick was wonderful in guiding me with direction on some tax questions I had. He was concise, and to the point, and was happy to provide general info to me at no charge. I truly appreciate him and would highly recommend him.
Miguel AlvaradoMiguel Alvarado
15:56 25 Mar 24
By far the best attorneys I have ever worked with. They’re are very helpful and supportive from day one. They went above and beyond to make sure all my documents were submitted on time and gave updates as soon as they received them. I cannot name a single flaw in their work. Their team of assistants are very professional and seem to all be on the same page. I’ve made multiple phone calls and sent a ton of emails to their staff and they were able to help me all through the course of the case. I cannot express my gratitude enough for how excellent they handled my case.
Lucy FoyLucy Foy
06:55 19 Jan 24
My first appointment I had with, Tax Attorney Nick Nemeth, gave me such a sense of relief. He listened and gave me his professional advice, Mr Nemeth took my case. I was well kept updated, by phone calls and letters. That really impressed me and gave me so much confidence in them. The case went on for a couple of months. The day I received the call from one of his team members Kyle, informing me that the case was resolved and that I owed absolutely nothing to the IRS, I was overwhelmed with joy. I would recommend this law firm to anyone that needs help, with any tax issue. Thank you, to the Law Firm of Attorney Nick Nemeth and his team.
Bradley RunyonBradley Runyon
20:17 13 Jan 24
I received a tax bill in the mail from the IRS last year in 2023. The fees and penalties I owed were something I myself could not afford. I reached out to Nick Nemeth's firm and received the best experience you could imagine. The team was professional, educational, and fast. If you have a tax issue with the IRS using another firm other than Nick Nemeth's would be an error in judgment. I would recommend their services above others.
Sue HulsemanSue Hulseman
19:55 11 Jan 24
Working with Nick Nemeth and his team to resolve my debt with the IRS was the best decision I could have made. I felt such relief knowing I didn’t have to deal with the IRS myself. They did a wonderful job and were responsive to my questions and kept me abreast of my case. My outcome was exactly what I was hoping for. I strongly recommend using them if you have an issue to resolve with the IRS.
20:53 21 Dec 23
I had an incompetent tax preparer, who also ignored several notices from the IRS, which in the end resulted in a lien on my property. I did not know what to do and an attorney friend recommended that I contact the Nick Nemeth Law Offices. I met with Jamie Flores and Ivan Nalbantov in December 2021 for a free consultation, and right away was impressed by their thorough examination of my paperwork and extensive knowledge of IRS tax laws. I felt not pressured and appreciated their advice and in the end decided that I would pursue resolving the issue by myself. I paid the IRS Civil Penalty and, as recommended also submitted a letter to the IRS requesting a refund and explaining what happened. I am glad to report that my persistence finally paid off. My case took two years to resolve and I finally received a full abatement/refund check from the IRS in December 2023. I could not have done this without the straightforward recommendation of Jamie and Ivan; and I highly recommend the Nick Nemeth Law Offices to anyone needing help with the IRS.
Susan WilsonSusan Wilson
03:27 25 Jan 23
I have been very pleased with the solid counsel and guidance that Nick Nemeth has provided me regarding my tax issue. I found him to be honest and straightforward which I appreciated. I was impressed with his relevant experience and knowledge . He has definitely brought me peace of mind during a difficult and stressful time.
Sarah HowardSarah Howard
03:44 14 Nov 22
I would like to thank Mr. Nick and his staff for the superb help that I received from them. My IRS problem was resolved quickly and efficiently. It took 2 visits to convince me that I was over my head. I thought that I could call the IRS, appeal my tax notices and settle on a payment plan on my own. After many phone calls to the IRS, waiting sometimes more than 4 hours with no resolution to speak of, it proved to be extremely difficult and stressful. Revisiting Mr. Nick was a huge wake up call. My account was reviewed, and a payment plan was established with the IRS within a week. I will be forever grateful to the staff who worked on my case and especially to Lorna who listened to me vent while going through this painful process.
00:33 07 Aug 22
I cannot say enough good things about Nick and his team. When I first met with Nick he was up front, honest, friendly and efficient. When I worked with one of his attorneys, Eric B, I was just as pleased. All of the staff there are nice and very helpful. I wish I hadn't waited so long to get help with my issue. Over 6yrs I tried getting through and getting anywhere with the IRS and hardly made any progress. I know this may not be the case for all, and even I thought it would take longer than it did, but 3mos and they had my situation straightened out. I still can't believe it. Thank you thank you THANK YOU for all that you did for me. This is a huge burden gone out of my life now thanks to you. If anyone needs help out there, I know you may not want to shell out more money to get their help but it may just save you in the long run.
Spoilly GirlSpoilly Girl
23:49 03 Aug 22
The Nemeth Law team is exceptional. They treat their clients like a family member who is in crisis. They want you to get the best possible outcome. I really appreciate everything that they did for me. Jake and Ashley had the greatest role in my case and it all turned out for the best for me. Thank you Nick and team for easing my fears and getting me through the long process. I'm truly grateful.
Eddie WaltEddie Walt
19:44 12 Jul 22
During a time in which competent, professional service at a fair price seems to have disappeared, Mr. Nemeth and his team are a refreshing breath of fresh air.From my first phone call to the final settlement of our case with a non-responsive IRS, they under-promised, over-delivered and were in constant courteous contact to make sure we knew exactly what was happening and where we stood.I hope to never need their services again, but, should I receive another friendly letter from the IRS...I know who to call!
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