IRS Penalties
We’re less than two weeks away from the start of 2016, and with a new year, there comes a reset of all the tax filing deadlines. Some of you may have to deal with only one deadline, while others – especially if you’re a certified public accountant (CPA) – have to be aware of all three. The following are the tax deadlines for the upcoming year:
- Business Tax Deadline – Tuesday, March 15, 2016
- Personal Tax Deadline – Friday, April 15, 2016
- Exempt Organization Tax Deadline – Monday, May 16, 2016 (Or the 15th day of the 5th month after the tax year end date for fiscal year organizations)
Tax deadlines are very important, but even more important are the penalties that you will incur if you happen to miss a due date. Remember, there are two types of penalties, failure-to-file and failure-to-pay, with the first leading to more expensive consequences. So even if you can’t pay the taxes you owe, your best option is to still file the return on time.
Business & Personal Taxes
Failure-To-File
If you fail to file at all, the penalty is generally 5% of the unpaid taxes for each month or part of month it is late, up to 25% of your unpaid tax.
If the return is more than two months late, the minimum penalty is $135 or 100% of the unpaid tax, whichever is smaller.
Failure-To-Pay
If you fail to pay, the penalty is usually .5% to 1% of your unpaid taxes for each month or part of month your taxes are not paid – up to 25% of unpaid taxes.
Important: It is possible for both penalties to be applied within the same month. The 5% failure-to-file penalty is reduced by the failure-to-pay penalty, but your return can’t be more than 60 days late. The minimum penalty will still be $135 or 100% of the unpaid tax, whichever is smaller.
Business Tax Only
For late returns with no tax owed, the penalty is $195 for each month or part of a month your return is late – up to a complete year. This amount is then multiplied by the total number of shareholders within the corporation during that tax year.
Exempt Organization Taxes
Failure-To-File
Exempt organizations with gross receipts of less than $1 million, and no reasonable cause for filing late, can be charged $20 for each day your return is late – up to $10,000 or 5% of your total gross receipt, whichever amount is less.
For tax-exempt organizations with revenues of $1 million or more, the IRS can charge you $100 for each day your return is late – up to a max charge of $50,000.
And the biggest penalty of all…
If your exempt organization fails to file for three consecutive years, it will automatically lose its exemption status.
Let our holly, jolly support team assist you, if necessary, with the e-filing process. Don’t hesitate to give us a call at (803) 514-5155 Monday through Friday from 9 a.m. to 6 p.m. EST, or drop an email down our chimney 24/7 at [email protected].
