Our Expertise Are In...

  • Help Reduce You Debt Significantly
  • Helping to Set You on Path to Financial Freedom
  • captcha
    Upon clicking the submit button, I expressly agree to the privacy policy and the terms and conditions.

    Failure to File Penalty

    What is the IRS Failure to File Penalty for Not Filing Taxes?

    There are over one hundred different penalties the IRS can file against you, but nothing is as harsh (or as common) as the penalty for failure to file your taxes. Did you know that the penalty given for failing to file your taxes with the IRS is made up of monthly charges that are elevated by ten times the penalty for failure to pay taxes? It is assumed the best course of action to take when you are unable to pay your taxes is to evade the IRS. However, the IRS is smart, and it might take them one to two years to find you, but they will. The IRS does not want people to hide, they encourage you if you cannot pay to talk with them and would out a way to pay taxes even if a full payment is not conceivable.

    How to calculate the failure to file penalty

    The calculations for the penalty regarding failure to file starts immediately following the due date given by the IRS to file taxes, which is April 15, unless the IRS grants you personally an extension. If you file for an extension and get one granted to you, then the due date to file taxes gets moved to October 15. If, however, you request an extension but did not reimburse a minimum of ninety percent of taxes owed by April 15, you will receive a penalty for failure to pay between April 15 and October 15. If you still do not pay the balance after the deadline hits in October, a penalty for failure to file will be added to your folder.

    Failure to file penalty due April 15. The IRS gives a five percent penalty every month, starting on April 16 . This can really begin to add up. The calculated penalty is based on the primary tax amount owed, not taking into account and additional interest or penalties incurred. The maximum failure to file penalty is twenty-five percent. This amount will be reached five months into non-filing, which is September 16 of that year.

    Failure to file penalty due October 15. If taxes are not completely filed by this due date, a five percent penalty per month will be added to the total tax amount. To calculate the penalty, the IRS bases it on the original amount of owed taxes. The maximum penalty that is given to someone who fails to file taxes is twenty-five percent, which will be reached by March 16 of the following year. If you fail to pay at least ninety percent of taxes by the original date due, April 15, you are charged a penalty of .5 percent. Another .5 percent is charged between April and October. When the penalty for failing to file begins in October, you will owe a combined penalty percentage of 4.5 which will include .5 percent for the penalty of failing to pay. Once the combined penalty reaches twenty-five percent and you are still delinquent in your payments, your account will continue to receive a .5 percent penalty for failure to file.

    Failure to file penalty due to fraud. The IRS can drastically increase the failure to file penalty if they find that you did not file due to intention to commit fraud. The percentage associated with failure to file goes from five to fifteen percent. This can hit a maximum level of seventy-five percent of the original owed taxes. Though use of this penalty is very rare, if the IRS sees an apparent attempt to commit tax fraud, they will utilize it.

    Removing or reducing the penalty for failure to file

    If you compose the right kind of request, the IRS is able to either reduce or get rid of any penalties it might have charged you. Statistically speaking, around thirty-three percent of penalties charged by the IRS are often eliminated from the total amount of tax debt. If you can show “reasonable cause,” it is actually not very difficult to get the penalties removed. When showing “reasonable cause,” you need to demonstrate a valid argument on why you were not able to file your taxes in a timely matter. The IRS is known for accepting a variety of reasonable causes. There is no set list of accepted causes, as each case is determined on its own merit. “Penalty abatement” is the term used for eliminating penalties. It is always beneficial to research penalty abatement to see if you are able to qualify to have some of your penalties removed. The IRS is not a machine; they do understand there are instances that might inhibit an individual with complying with the tax laws regarding filing. Although penalties are added automatically through their computerized system to individuals who do not comply with the filing due date, they can be stricken from the total amount owed very easily.