Difference Between Failure-To-File & Failure-To-Pay Penalties

There is a difference between failing to file your taxes on time and failing to pay your taxes on time.  The law provides that the IRS can assess a penalty on either or both instances, should they occur.

Failure-to-file occurs if you do not file by the tax deadline.  This penalty is generally more than the failure-to-pay penalty, so if you need more time to file, you can file your Tax Extension within minutes, by using a service like ExpressExtension, to avoid this penalty.

• This penalty is generally 5% of the unpaid taxes for each month or part of month it is late, up to 25% of your unpaid tax. 
• If the return is more than 60 days late, the minimum penalty is $135 or 100% of the unpaid tax, whichever is smaller.

Failure-to-pay occurs if you do not pay by the due date.  Filing a Tax Extension only extends the amount of time to file, NOT to pay any tax due.

• Generally there is a penalty of  ½ to 1% of your unpaid taxes for each month or part of month after the due date that your taxes are not paid, up to 25% of unpaid taxes. 
• If you filed a Tax Extension and paid at lead 90% of your tax due by the original due date and pay the remaining balance by the extended due date, you will not incur a failure-to-pay penalty.

If both penalties apply in any month, the 5% failure-to-file penalty is reduced by the failure-to-pay penalty; unless your return is more than 60 days late.  The minimum penalty will be $135 or 100% of the unpaid tax, whichever is smaller. If you can show reasonable cause for filing or paying late, the penalties may be waived.
 

While we do not give tax advice here at Truck Services of North America, we do want to make our customers aware of of situations that may affect you during tax season. Please contact a tax professional for tax advice and questions pertaining to tax laws.

Truck Services of North America works to help you stay informed of changes in laws that affect you. For more information about any of our services, contact us at TSNAmerica.com, email support@TSNAmerica.com or call 803.386.0320.