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Tax Penalties and Interest

When taxpayers are delinquent in filing taxes, or in paying the full amount owed, the IRS will assess extremely high and punitive penalties and interest. In many cases, taxpayers are able to pay the original amount of taxes owed, but the penalties and interest add up so quickly that tax relief is needed.

To see what tax relief can do for you, take a moment to answer a few simple questions, and you'll be provided with a free confidential tax relief consultation - at absolutely no obligation.

Penalty Abatement - Interest Abatement

If the IRS is pursuing you with notices that communicate failure to deposit, failure to pay, or failure to deposit you are likely to face a wave of tax penalties and interest that can quickly double your tax debt owed before you know it. With the assistance of experienced tax relief specialists and attorneys, you may qualify for a Penalty or Interest abatement that could save you thousands or tens of thousands of dollars.

Tax Penalties - Know Your Rights

Many would probably agree that facing an IRS tax penalty is one of life's more negative experiences. Filing and paying your taxes in a timely manner is extremely important. When you don't, large fines (with interest) and penalties (including civil fines to imprisonment for criminal tax evasion) may be imposed on you.

What tax matters cause the IRS to subject you to penalties? The main penalties occur when you:

  • do not file your tax return
  • pay your taxes late (past the due date)
  • substantially understate your taxes (or a reportable transaction)
  • file an inaccurate claim for refund or credit
  • file a frivolous tax submission
  • provide fraudulent information on your return (a civil fraud penalty)

Penalties arise for such taxes as income from self-employment, payroll or withholding, interest, dividends, alimony, rent, gains from the sale of assets, prizes, and awards.

Typically, the IRS also expects tax penalties to be paid once they have noticed a taxpayer of the penalty.

File Your Tax Return

Perhaps you forget to file your tax return and think that once you do file it, you'll be okay with the IRS. The consequences of not filing your return could cause you to pay a penalty of as much as 25 percent of the taxes you owe. Additionally, the taxes you owe could be surcharged a 5 percent fee. This tax penalty is calculated monthly and could add up to the maximum of 25 percent (pending the filing of your tax return) of the tax bill.

Your tax penalty will be a minimum of $100 or the total you owe (whichever is less) if your tax return is more than 60 days overdue. If you can show what is called reasonable cause as to why you filed your taxes late, you may be able to stop or abate the penalty.

How do you show "reasonable cause"? The tax laws, forms and penalties can be voluminous and complex which is why many taxpayers rely on tax experts and preparers to handle their taxes.

With the assistance of experienced tax relief specialists and attorneys, you may qualify for a Penalty or Interest abatement that could save you thousands or tens of thousands of dollars. To see what tax relief can do for you, take a moment to answer a few simple questions, and you'll be provided with a free confidential tax relief consultation - at absolutely no obligation.

File On Time

Is there a penalty if you file your tax return but are unable or do not do not pay your taxes on time? Yes. The tax penalty is generally estimated up to 25 percent of the tax amount you owe. The longer you don't pay your tax bill, the more the IRS could charge you in interest. Every month you may be assessed 1/2 of 1 percent up to the maximum of 25 percent.

Provide Enough Information

Filling out your tax returns requires accuracy and the proper amount of information. If you do not believe you have the knowledge to accurately and completely perform this task, it is smart to get the help of a tax specialist. Ignorance of tax procedures may subject you to what the Internal Revenue Service deems a "frivolous return." The penalty for this is stiff - $500.

File an Accurate Return

As with a frivolous tax penalty, there is a penalty for filing inaccurate of incorrect information on your return. Claiming ignorance which results in a negligent regard for tax rules and regulations or underestimating the amount you owe, could result in a tax penalty of as much as 20 percent of the tax amount actually due.

What does the IRS consider negligence? It is "the lack of any reasonable attempt to comply with provisions of the Internal Revenue code" or includes (but is not limited to) any failure to:

  • reasonably try to abide by the Internal Revenue Service's laws
  • employ reasonable and ordinary attention in preparing a tax return
  • maintain sufficient records and account books or to verify items correctly

And though a tax penalty for negligence may be reversed or abated, you must prove to the IRS that you acted with reasonable cause and good faith. It is wise to enlist the help of a tax specialist, attorney or expert in such matters.

Civil Fraud Penalty

The most imposing tax penalty comes as a result of filing a fraudulent return. If the IRS determines that you have under paid your taxes because of fraud, a hefty penalty of 75 percent will most likely be attached to your tax bill.

Should IRS examiners determine that there is convincing evidence of fraud, they may refer the case to the Internal Revenue Service Criminal Investigation Division for possible criminal prosecution. When this unfortunate event occurs, penalties and sanctions are subject to both civil law and criminal prosecution.

However, it is very important to know the law because negligence or ignorance of the law is not considered fraud.

With the assistance of experienced tax relief specialists and attorneys, you may qualify for a Penalty or Interest abatement that could save you thousands or tens of thousands of dollars.

If you need tax relief help, take a moment to answer a few simple questions, and you'll be provided with a free confidential tax relief consultation - at absolutely no obligation.

Get your case reviewed by Tax Analysts, Tax Attorneys, and even ex-IRS agents
Compare your tax relief options and benefits and decide what's best
If you choose, your case can be mediated on your behalf with the IRS to arrive at the best possible IRS concessions
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Listen to the stories of people just like you and how they overcame their tax debts.
I found out I had a tax lien of $250,000 from taxes that I hadn't filed..."
—Richard, VA
"...Because of some difficult family problems and a divorce and some financial issues...I did not file my income properly..."
—Paul, NJ
"...we had gotten a letter from the IRS basically threatening to levy against our property and it's scary..."
—Sharon, OH
For immediate assistance with an IRS tax matter call , or request online.
We understand IRS issues are stressful and complicated. Just answer a few questions online to help us find the best course of action for you. If you prefer you may call toll-free .
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