IRS Filing and Payment Penalties

With the last of the IRS extension deadlines coming to an end soon, some of you are facing the reality of not being able to file on time. While filing late isn’t the best practice, getting your tax return filed as soon as possible after the deadline can lessen IRS penalties.
At this point, you’re probably wondering what those penalties will be since you may have no choice but to file late. They vary depending on which type of tax return you’re filing, and they group into failure-to-file and failure-to-pay penalties.

Failure To File
This type of penalty will occur if you file late or you eventually don’t file at all. For business and personal tax returns, neglecting to file on time can cost you 5% of your unpaid taxes each month or even part of a month your return is late.

The maximum penalty for these late returns can climb as high as 25% of your unpaid taxes. And if you’re more than two months late, the IRS can charge your remaining tax bill or a minimum $135 for each month you’re late – whichever amount is the least.

For tax-exempt organizations, the IRS charges a daily $20 fee each day your tax form is late. And for organizations with gross receipts over $1 million, the cost increases to $100 every day. The maximum penalty can reach a staggering $50,000 or 5% of your organization’s total revenue.

Failure to Pay
It doesn’t matter if you filed a tax extension, filed on time, filed late, or didn’t file at all – if you don’t pay your tax bill by the original deadline, the IRS can also charge a late payment penalty. For business and personal taxes, the cost is typically 0.5% of your unpaid tax amount each month your payment is late and can increase as high as 25% until you’ve paid all taxes.

Exempt organizations usually don’t have a tax amount to pay to the IRS hence being tax-exempt. But if your nonprofit or charity incur any excise taxes, you’ll have to pay those on time as well.

Tax Fact: If you file a tax extension and pay at least 90% of your tax bill by the original deadline, the IRS will allow until the end of your extended due date to pay the other 10% without penalties.

Double Penalties
It’s possible for the IRS to charge you both penalties for the same month. In such instances, the failure-to-file penalty gets reduced from 5% to 0.5% of unpaid taxes. There are ways for you to waive or contest against IRS penalties, but they require reasonable explanations why you filed or paid late – consult with a tax professional about your options.

Costs for filing or paying the IRS late can pile up quickly – tax extensions can alleviate the stress of penalties, but you have to remember to file before your extended deadline ends. Extensions only increase your time to file; you are still responsible for paying any tax amounts before the original IRS due date. At, you can pay tax liabilities while e-filing for an extension with our Electronic Funds Withdrawal option.

For any questions or assistance with e-filing extensions or paying tax amounts online, contact our U.S. – based support team at 803.514.5155, Monday through Friday from 9 a.m. to 6 p.m. or email us at [email protected].

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