- February 23, 2015
The law imposes punishment through penalties in order to ensure that all tax-payers should obey the law by filing and paying taxes on time. This ever-continuing cycle runs year after year, and as known IRS collects taxes for the welfare of the nation-building exercise. So it is the responsibility of each citizen to respond towards filing and paying taxes on time and should be one of their prime duties.
Some of the penalties like failure-to-file- penalty. If an individual does not file an individual income tax return through 1040 or its series by the due date including automatic extensions of IRS Form like 4868, then they may have to pay a failure-to-file penalty. The penalty is 5% of the tax not paid by the due date for each month or part of a month that the return is late. This penalty cannot be more than 25% of one’s individual tax, but it is reduced by the failure-to-pay penalty for any month when both penalties apply. However, if one’s return is more than 60 days late, the penalty will not be less than $100 or 100% of the tax balance, whichever is less. One will not have to pay the penalty if one can show reasonable cause for not filing on time.
Failure-to-pay penalty- One may have to pay a penalty of 1/2 of 1% of your unpaid taxes for each month or part of a month after the due date that the tax is not paid. This penalty cannot be more than 25% of one’s unpaid tax. One will not have to pay the penalty if one can show a good reason for not paying the tax on time.
If a penalty is due to a frivolous position on one’s part, then one may have to pay a penalty of $500 if one files a return that does not include enough information to figure the correct tax or that shows an incorrect tax amount due to the negative factors like A frivolous position on one’s part, or A desire to delay or interfere with the administration of federal income tax laws.
This penalty will be in addition to any other penalty that may apply as provided by IRS law.
An accuracy-related penalty of 20% applies to any underpayment due to any negligence of rules or regulations that includes the lack of any reasonable attempt to comply with provisions of the Internal Revenue Code or any disregard that includes the careless, reckless, or intentional disregard of rules or regulations or any substantial understatement of income tax.
This penalty also applies to other unlawful conditions towards IRC. Even though an underpayment was due to both negligence and substantial underpayment, the total accuracy-related penalty cannot exceed 20% of the underpayment. The penalty is not imposed if there is reasonable cause accompanied by good faith.
Therefore to abate the penalty, the best way is to file and pay US individual income tax on time also for any requirement of automatic extension of time one may e-file IRS form 4868 through authorized tax service partner Tax2efile.
