Today, Optima Tax Relief Lead Tax Attorney, Phil, talks about the common IRS penalties: failure to pay and failure to file, including what each are, and which one is worse for taxpayers.
Failure to Pay Penalty
The failure to pay penalty is a financial penalty imposed by the IRS on taxpayers who fail to pay their taxes by the due date. This penalty typically accrues at 0.5% of the unpaid taxes for each month or part of a month the tax remains unpaid. It will continue to accrue until the date the tax is paid in full. However, it will not exceed 25% of your unpaid taxes.
Failure to File Penalty
The failure to file penalty is a financial penalty imposed by the IRS on taxpayers who fail to submit their tax return by the deadline. This penalty typically accrues at 4.5% of the unpaid taxes for each month or part of a month the tax return is late. It will continue to accrue until the date the tax return is submitted, up to 22.5% of your unpaid taxes.
So, Which is Worse?
Well, our expert says the failure to file penalty is. This is because of the hefty penalty of 4.5% each month the balance goes unpaid your taxes are filed. So, as Phil says, “Do something.” In this case, do file your taxes, even if you can’t afford to pay your tax bill. At least then you won’t need to worry about the aggressive failure to file penalty.
Tune in next Friday when Phil answers your questions about the Child Tax Credit.
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