The first penalty is not really a penalty, but it occurs so often that I thought I would mention it. Any unpaid amounts to the IRS accrue interest from the due date of the return until the date of payment. The interest rate is determined quarterly and is the federal short term rate plus 3%.
The failure to pay penalty is assessed on any amount of tax that remains unpaid from the due date of the return until the date of payment. Similar to interest, this is assessed when the taxpayer does not pay their full tax bill on time. The penalty is .5% for every month that the tax goes unpaid, up to a maximum of 25%.
The failure to file penalty is assessed on any taxpayer who does not file a timely tax return or a timely extension request and owes money to the IRS. The penalty is 5% for every month the tax return is late, up to a maximum of five months. The minimum penalty for returns 60 days late or more is $135 or 100% of the tax, whichever is less.
If you are having tax issues, contact our office by phone at 816-524-4949 or visit our website www.Hoorfarlaw.com.