IRS Tax Penalties

Penalties on the taxpayer or business (referred to as taxpayer from here on) for not filing or paying taxes are designed to impose severe financial reprimand, in such a manner, that the taxpayer learns a quick lesson to not be late in paying taxes or filing the tax returns. In addition to imposing penalties on the taxpayer, from the day the returns are due, interest begins to accrue on the penalties. What may look like a reasonable amount of taxes you can handle paying in the next 12 months, suddenly may be up to 10%, 20% or 30% more due to the interest and penalties.

Specific penalties include:

  • Failure-to-File Penalty of your tax return by the tax filing deadline.
  • A Failure-to-File Penalty even if you decide not to file ONLY because you do not have the money in full or part.
  • A Failure-to-File the Proper Estimated Tax Penalty reminds the taxpayer that they are required to pay in the taxes as they earn it on a quarterly basis.
  • Failure-to-File an Extension Penalty is for failing to submit the correct form notifying the IRS you will need an extension.
  • Failure-to-Pay Penalty which is assessed for non-payment of taxes due by April 15th, March 15th for a business .


Publication 17, written by the IRS, under ‘Rights as a Taxpayer’ states “ the IRS will waive penalties when allowed by law if you can show you acted reasonably and in good faith or relied on the incorrect advice of an IRS employee.” IRS Tax Topics 306 and 2013-58, both refer to penalty abatement or waiver of penalties for both estimated payment penalties and other penalties.

At Padgett, we exercise all opportunities we have to ethically and responsibly work with the IRS to remove penalties and have them abated. KEEP in mind – interest accrues on penalties and we remind the IRS of this and also request removal of interest on penalties.

Call Christy at 586-323-2360 to find out more about penalty removal and if you will be eligible.

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