Facts to know Failure to File or Pay Penalties

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Tax Preparation Services – The number of electronic filing and payment options increasesevery year, which helps reduce your burden and also improves the timeliness andaccuracy of tax returns. When it comes to filing your tax return, however, thelaw provides that the IRS can assess a penalty if you fail to file, fail to payor both.Here are eight important points about the twodifferent penalties you may face if you file or pay late.

1.  If you do not file bythe deadline, you might face a failure-to-file penalty. If you do not pay bythe due date, you could face a failure-to-pay penalty.
2. The failure-to-filepenalty is generally more than the failure-to-pay penalty. So if you cannot payall the taxes you owe, you should still file your tax return on time and pay asmuch as you can, then explore other payment options. The IRS will work withyou.
3. The penalty for filinglate is usually 5 percent of the unpaid taxes for each month or part of a monththat a return is late. This penalty will not exceed 25 percent of your unpaidtaxes.
4. If you file yourreturn more than 60 days after the due date or extended due date, the minimumpenalty is the smaller of $135 or 100 percent of the unpaid tax.
5. If you do not pay yourtaxes by the due date, you will generally have to pay a failure-to-pay penaltyof ½ of 1 percent of your unpaid taxes for each month or part of a month afterthe due date that the taxes are not paid. This penalty can be as much as 25percent of your unpaid taxes.
6. If you request anextension of time to file by the tax deadline and you paid at least 90 percentof your actual tax liability by the original due date, you will not face afailure-to-pay penalty if the remaining balance is paid by the extended duedate.
7. If both thefailure-to-file penalty and the failure-to-pay penalty apply in any month, the5 percent failure-to-file penalty is reduced by the failure-to-pay penalty.However, if you file your return more than 60 days after the due date orextended due date, the minimum penalty is the smaller of $135 or 100 percent ofthe unpaid tax.
8. You will not have topay a failure-to-file or failure-to-pay penalty if you can show that you failedto file or pay on time because of reasonable cause and not because of willfulneglect. 

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