Procrastination in filing pending dues
  • March 15, 2016
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When it comes to filing taxes, many people tend to get stressed out, which often leads to procrastination. Taxpayers, however, are not the only ones to blame for such indecisions. The intricacies of the U.S. Tax Code is a cryptic language for most taxpayers, which is why many people are unable to file their taxes and have to bear various consequences including penalties. To validate the significance of filing taxes before the annual deadline (April 15), in this post, we discuss the penalties taxpayers have to pay for late filing and payment.


The US citizens run the risk of facing heavy penalties or missing out on tax credits worth of thousands of dollars if they wait until the last minute to submit their tax forms. There are two types of penalties that apply if you fail to file or pay. The first one is the failure-to-file penalty, and the other is the failure-to-pay penalty.

1. Failure-to-file Penalty

The monthly penalty for late filing is typically 5 percent of the amount of unpaid taxes. The minimum late filing penalty is lesser of $135 or 100 percent of the unpaid taxes. It, however, does not exceed 25 percent of your unpaid taxes.

2. Failure-to-pay Penalty

The monthly penalty for late payment is 0.5 percent of your unpaid taxes. The penalty starts accruing the day the due date expires and applies on a pro-rata basis for each month during which the taxes remain unpaid. The maximum penalty may accumulate up to 25 percent of your unpaid taxes.

Note : If you are supposed to pay both the types of penalties in any given month, the maximum combined amount can be up to 5 percent.

Ways to Avoid Penalties

To avoid shelling out your hard-earned money as tax penalties, plan your tax payments well in advance. If you are too cash-strapped to do that, here are a few ways that can be handy to avoid penalties.

  • Request an extension – To avoid failure-to-pay penalty, request for an extension of time to file. You still have to pay the interest on the unpaid taxes post-April 15 every year.
  • Ask for a tax relief –  If you have a valid reason for not being able to file or pay your taxes, the IRS may waive your late filing or late payment penalty after checking your past payment history.

A Word of Advice

If you don’t owe any taxes to the IRS or are due a refund, and file late, you will not be penalized. On the other hand, if you have back taxes and still file or pay late, you need to pay penalties. Typically, the failure-to-file penalty is as high as ten times the failure-to-pay penalty, and therefore, it is advisable to file tax returns and pay as much as possible to avoid the late filing fee. You can also consult a reputed tax attorney, who can handle all types of IRS problems, and help you get peace of mind.

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