The IRS Failure-to-Pay Penalty is 1/2 of 1% of your taxes due for each month or part of a month after the April 15th due date.
Did you file your taxes by the tax deadline and while doing so were caught off guard by the tax due amount? Maybe you were expecting a tax refund, but instead realized you actually owe the IRS. If you have other bills to pay, this might put you into a sticky situation.
The tax due amount you owe will increase as time passes. If you can’t pay the tax due, the IRS will most likely work with you. Regardless of your tax due amount, be sure that you have filed your taxes. If not, you will face failure-to-file penalties on top of your failure-to-pay penalties.
How much is the penalty for not paying tax due on time?
The IRS failure-to-pay penalty is ½ of 1% of your unpaid taxes for each month or part of a month after the due date. With each month, the penalty adds up and can grow up to 25% of your unpaid taxes. To avoid these extra fees, it’s best to pay your late tax-due amount as soon as possible.
If you didn’t pay your taxes and also didn’t even get around to filing your taxes on time either, you’ll also pay a failure-to-file penalty. That’s a 5% of your tax due penalty for each month you don’t file on top of your failure-to-pay penalty. With that said, you should file as soon as possible to avoid the unnecessary penalties.
Does the IRS have an Installment Payment Plan to help me?
The IRS has an installment payment plan. That means if you owe $50,000 to the IRS, you can request a payment plan so you can pay off your tax due in increments. To do so, go to the IRS.gov website to fill out the Online Payment Agreement form. Alternatively, you can call the IRS to set this up at 800-829-1040.
Owe more than $50,000? You’ll be able to set up a payment plan with the IRS by completely a financial statement. This will help determine your monthly payment amount.
I’m going through a financial hardship and can’t pay my tax due. Help!
- Form 911- Financial Hardship Form: By filling out Form 911, Request for Taxpayer Advocate Service Assistance, you will request the IRS to delay collect your tax due. However, it’s best not to do this because you’ll still have the tax penalties add up along with interest.
- Form 656- Offer In Compromise: If you can prove you are not able to pay your tax due because the amount due is greater than your total assets and income, you can fill out form 656. If everything is filled out correctly, you’ll be able to settle with the IRS to pay something less than what is due.
If you forgot the tax deadline of April 15 and have tax due, you will be facing failure-to-pay penalties and failure-to-file penalties.
If you haven’t filed your taxes yet, the failure-to-file penalties will not continue to increase if you file today. RapidTax is here to help you file your late taxes. From there, the IRS will work with you so you can pay of your tax due.
4/17/2014 Photo via OTA Photos on Flickr
