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Late Tax Filing Fees vs. Late Tax Payment Fees


Posted in on April 28, 2017

The Internal Revenue Service expects every taxpayer to pay taxes throughout the year and to submit all taxes due by the April tax deadline. This deadline is usually April 15, but the date can vary depending upon whether the 15th falls on a weekend. For taxpayers who do not file or pay by the due date, substantial penalties may be assessed.

A Virginia tax lawyer can help taxpayers to understand the possible consequences of filing late and can assist taxpayers in trying to reduce any penalties or back taxes that they owe to the IRS.

The IRS is becoming more aggressive with collecting debts, including employing outside collections agencies to go after taxpayers who owe money to the Internal Revenue Service. With these new efforts to collect, it has become more important than ever for individuals and businesses with tax problems to get the right legal advice on how to resolve their tax issues.

Filing Your Taxes Late Has Serious Consequences

Taxpayers need to understand the penalties that they could face for failure to comply with deadlines set by the Internal Revenue Service. Many taxpayers who do not have the money to pay their taxes by the April deadline will decide to wait to file their taxes. Unfortunately, this is a major mistake that comes at a big cost. The penalty for failing to file tax returns is far more substantial than the penalty that is imposed simply for paying taxes late.

If a taxpayer requests an extension by the April deadline, that taxpayer will be given until October of the same year to file taxes. As long as the taxpayer requested an extension and gets the tax return filed by the October deadline, no late filing penalty is imposed. If the taxpayer owed money and wasn't able to pay it on the April deadline, the taxpayer will pay a late payment penalty equal to .5 percent of the additional taxes owed, up to a maximum of 25%. This late payment penalty is charged monthly for each fraction of the month that the taxpayer is late in making a payment. The penalty is on top of interest that accrues on the amount of tax debt that is due. Taxpayers who are owed a refund will not face either a late payment or late filing penalty.

If a taxpayer either doesn't request an extension or doesn't file the tax return by the extension deadline in October, then the penalties are much more serious. The late filing penalty is up to 10 times higher than the late payment penalty. A taxpayer who files late and pays late will pay not only the .5 percent late payment penalty, but will also pay a 4.5 percent late filing penalty. This is a total combined penalty of 5 percent on unpaid taxes due, up to a maximum of 25 percent, for not filing taxes on time. 

The IRS also establishes minimum penalties for taxpayers who do not file within two months of the deadline (either in April or October if an extension was requested). A taxpayer who is 60 days late in filing will end up paying a minimum penalty of the smaller of 100% of unpaid taxes or $135.

If you are concerned you may owe penalties or interest, or if you want help filing taxes to avoid penalties, you should contact a tax lawyer Kevin Thorn for help as soon as possible when you realize you have a tax issue.

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