Taxes Are Due April 17th. Have You Paid Your Taxes Yet? If Not, You May Be Entitled To Some Penalty Relief.

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The failure to file your tax return on or before the due date, or to pay the taxes that are due, can be very costly and in many cases double one’s tax liability.

Under IRC §6651(a)(1), the penalty for the late filing of a tax return is an additional 5% per month of the amount due, up to 25% in total. In addition under IRC §6651(a)(2), the penalty for non payment of a tax is 0.5% per month (one-half of one percent cumulative) of the tax due, up to a total of 25%. The penalties under both (a)(1) and (a)(2) are added, together, to the amount of tax owed unless a reasonable cause is shown as to why such a failure to comply occurred. That means that, in addition to the tax due, the taxpayer who has not filed a timely tax return or pay the tax due may be liable for an additional 50% in penalties. There are also other penalties such as negligence, fraud, and failure to pay estimated taxes that may increase the amount owed. Moreover interest on the unpaid taxes and penalties is calculated under IRC §6601 from the time the tax return is due until the date paid. The current underpayment interest rate is 3%. Consequently it does not take long for a taxpayer who has not filed his tax return or paid his tax to face paying an overwhelming tax bill.

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Published In: Wills, Trusts, & Estate Planning Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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