Penalties for filing IRS taxes late include a failure-to-file penalty, a failure-to-pay penalty if a taxpayer owes taxes or losing a refund if taxes are not filed within three years. IRS penalties accumulate monthly due to interest on unpaid taxes, and the penalty reaches a maximum at 25 percent of the total unpaid taxes.Continue Reading
The IRS explains the failure-to-file penalty is generally more than the failure-to-pay penalty. Taxes filed before the annual deadline prevent further penalties on taxes owed, even if a taxpayer cannot pay the entire amount owed. The IRS states the agency works with taxpayers to negotiate a way to pay, such as getting a loan or filing an installment agreement request. The IRS may hold income tax refunds if past-due amounts have not been paid.
The penalty for filing late is 5 percent of the unpaid taxes for each month the amount is late. The penalty begins the day after the tax filing deadline, according to the IRS. The failure-to-pay penalty is one-half of 1 percent of the unpaid taxes, which accrues monthly and begins the day after the filing deadline. If both penalties apply, the maximum penalty is 5 percent.
The minimum penalty for filing taxes more than 60 days late in one tax year is $135, or 100 percent of the unpaid taxes, whichever is less. Failure to file IRS taxes on time may also delay loan applications for mortgages and federal aid for higher education.Learn more about Income Tax