Tax Penalties

The IRS assesses two types of penalties on late filed income tax returns. The first and most expensive is the failure to file. Any tax return filed after the due date, including extensions, is considered late. The penalty is based upon the balance due with the tax return. The second penalty is the failure to pay. This is also based upon the amount due with the tax return and is calculated from the due date of the return, without regard to extensions. Some people erroneously believe that since they have a refund they don't need to worry about filing on time. However, if the return is ever audited and the result is a balance due, the penalties will be based upon the due date of the return, even if the audit occurs 2 years later.

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