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What is the tax penalty for filing a federal return late?

Many different problems can arise for a person when they are accused by the Internal Revenue Service of having filed a federal tax return in which they owe taxes after the applicable deadline without having been granted an extension. One is that they can face a hefty failure-to-file penalty.

How big of a failure-to-file penalty a person will face in relation to a late filing generally depends on how much in unpaid taxes are connected to the late filing and how much time elapsed before the late filing was finally submitted.

The typical failure-to-file penalty amount for a late filer is 5 percent of the amount of the taxes they owe in relation to the filing for every month (full or partial month) the filing was late.

There is both a maximum and minimum amount for failure-to-file penalties. The maximum amount is generally 25 percent of the amount of taxes a person owes in relation to a late filing. The minimum amount only applies if the filing was more than 60 days late. In such a situation, the minimum failure-to-file penalty amount a person can be assessed is whichever amount is smaller between $135 and 100 percent of the amount of taxes they owe in connection to the filing.

As a note, filing a federal tax return in which tax money is owed late can also expose a person to a second penalty: a failure-to-pay penalty. There is a limit to what the combined amount of a failure-to-file penalty and a failure-to-pay penalty can be for a taxpayer per month.

As this discussion illustrates, the penalty a person could be given in relation to filing a tax return late can be quite large, particularly if they owe a lot of taxes in relation to the return and were long past the deadline when they filed the return.

Tax penalties can be very tough on a person financially. Thus, an important thing for taxpayers who are facing tax penalties in relation to allegations of having filed a tax return late or other violations of federal tax rules to know is that, in some circumstances, there may be ways to get a tax penalty minimized or eliminated. Attorneys can help taxpayers with efforts to seek tax penalty relief.

Source: Internal Revenue Service, "What to Know about Late Filing and Late Paying Penalties," April 17, 2015

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