What Is the Penalty for Not Filing Taxes?

What Is the Penalty for Not Filing Taxes?

According to the IRS, failure to file taxes can result in severe payment penalties. These penalties can grow on a monthly basis, maxing out at as much as 100 percent of the actual tax monies owed.

A failure-to-file penalty is incurred if a taxpayer does not file taxes by the filing date, according to the IRS. If an extension is filed, then the failure-to-file penalty does not occur until after the extension date. The penalty for filing late is five percent of the money owed per month, with a maximum penalty of 25 percent. If the due date is exceeded by 60 days, however, then the penalty for failing to file is a minimum of $135 or 100 percent of the unpaid tax amount, whichever amount is smaller.

In some cases, a taxpayer may incur a failure-to-pay penalty along with the failure-to-file penalty. When this happens, the failure-to-pay penalty is reduced by the amount of the failure-to-file penalty, according to the IRS. If filed more than 60-days late, there will still be a minimum payment due of $135 or 100 percent of the unpaid tax amount. The failure-to-file penalty can be avoided if the taxpayer can show reasonable cause for the failure as opposed to neglect.