If you owe tax and don’t file on time, there is a penalty for not filing on time. The Failure to File Penalty is usually five percent of the tax owed for each month, or part of a month that your return is late, up to a maximum of 25 percent. If your return is over 60 days late, there is also a minimum penalty for late filing; it is the lessor of $205 or 100 percent of the tax owed unless your failure to file was due to reasonable cause and not willful neglect.
The IRS may abate penalties for filing and paying late if you have reasonable cause and the failure was not due to willful neglect. Making a late payment as soon as you are able may help to establish that your initial failure to pay timely was due to reasonable cause and not willful neglect.
Don’t ever ignore the IRS. A timely response to any notices may keep open the various options that are available to resolve your matter. Finally, if you don’t know what to do or are just intimidated by the IRS, contact a professional that specializes in IRS Tax Resolution. Remember, for every tax problem, there’s a solution.
(Constant W. Watson III, CPA, CTRS, is both a Certified Public Accountant and a Certified Tax Resolution Specialist. For a free consultation, call him at (708) 206-9900.
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