I paid my taxes late. What interest and penalties can I be charged?

The Internal Revenue Service (IRS) charges various interest amounts and penalties to taxpayers related to the filing of federal income tax returns or the payment of taxes.

Late filing of taxes. The IRS requires that taxpayers file their tax returns each year by April 15 (or technically around April 15, in cases where April 15 falls on a weekend).  If needed, a taxpayer can file an extension with the IRS, which gives the taxpayer six additional months to file their tax returns, or until November 15.  But whether you are filing your tax return on April 15 or November 15, you must file it.  Even if you owe taxes and cannot afford to pay them at the time you file, the IRS still requires that you file your tax return.

If you do not file your tax return on time, the IRS will charge you what is known as a Failure to File penalty.  The Failure to File penalty is charged at the rate of 5% of the tax liability due per month, up to a maximum amount of 25% of the tax liability due after five months.  For example, if you owe $400, 5% of this amount is $20.  This means that after five months, an additional $100 will be added to your tax bill, bringing your total amount owed to $500.

In addition, if you fail to file your tax return for too long, the IRS will file what is known as a substitute return for you.  In all likelihood, the substitute return will result in you owing a larger tax balance than if you file the return on your own, as the IRS will use the standard deduction rather than any itemized deductions you might have been able to use.

Late payment of taxes. The IRS requires that taxpayers pay any tax they owe on April 15 of each year.  Even if a taxpayer files an extension with the IRS so that they do not have to file their return until November 15, the IRS still expects you to pay the tax you owe by April 15.

If you do not pay your tax liability on time, the IRS will charge you what is known as a Failure to Pay penalty.  The Failure to Pay penalty is charged at the rate of .5% of the tax liability due per month, with no maximum amount for this penalty.  Therefore, for example, if you owe $400, .5% of this amount is $2.  This means that after five months, an additional $10 will be added to your tax bill, bringing your total amount owed to $410.

As you can see based on the information and examples above, the IRS considers someone failing to file their tax returns a much more serious matter than someone who files their tax returns but does not pay the tax liability due on time.

In addition to the penalties noted above, the IRS charges interest on the unpaid tax liability.  The interest rate charged by the IRS is based on current interest rates, adjusted every three months.

How can I get help in filing my tax return or addressing my unpaid tax liability?

If you need help with your tax return, a tax attorney can provide you with assistance.  A tax attorney knows the tax laws and will have experience in working with the IRS regarding unfiled tax returns or unpaid taxes due.

You can get help from a tax attorney by completing the short form found below, and a tax attorney will contact you.  The initial discussion with the tax attorney is free of charge, completely confidential, and does not obligate you to anything further.  Therefore, if you need help with your taxes, please take this opportunity today to get the help you need.

by Mark Johnston

Mark has been a contributor to legal web sites related to bankruptcy, tax, and criminal law since 2011. He has an Accounting degree from Texas A&M University.