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Tax Penalties – Consequences for Not Paying Taxes on Time

Illegal acts related to taxation, including tax evasion, are punishable by law and are subject to monetary fines. Civil penalties for not paying taxes are calculated in different ways and involve interest rates, while criminal penalties can be taken to court trial.


Tax Penalties - A General Overview

People who fail to file a tax return on time are mandated by law to pay 5% of the tax that was not paid on the deadline for every month to date of the tax return’s delinquency. “Failure to file” tax penalties for returns that are less than sixty days late should not exceed 25% of the income tax, but penalties for returns that have been late for more than two months cannot be less than 100% of the tax balance. Charges for not paying taxes by the due date start at 0.5% every month as long as the tax is not fully paid. Tax penalties under this category cannot exceed 25% of the tax balance. People with frivolous returns, or those that lack data resulting in an inaccurate tax amount, are required to pay a $500 fine.

Tax Evasion Penalties - Helpful Information

The United States Internal Revenue Service can put tax evaders in prison after a thorough investigation. Tax evasion penalties cost higher than fines for short-term delinquent taxpayers. Under U.S. law, people who attempt to illegally evade or defeat tax payments can face imprisonment of up to five years or pay $250,000. Corporations found guilty could be forced to pay as much as $500,000. In some cases, evaders can serve both fines and imprisonment. People convicted of submitting fraudulent tax returns, statements or related documents can face monetary penalties or up to three years of imprisonment, or both. Tax evasion penalties in this category can reach $250,000 for individuals and $500,000 for corporations.

Tax Penalty Calculator - Variations

Tax underpayment is subject to an annual interest rate of 4% of the unpaid tax. Rates in the United States change quarterly. The interest applies to every day that the tax balance remains unpaid. Since tax laws differ in many American states, state agencies may employ a different tax penalty calculator. Pennsylvania, for example, has a penalty and interest calculator in its personal income tax services website. The tool immediately displays the amount of tax deficiency, calculated interest, late filing penalty and total balance to the date of computation just by obtaining the amount and date of tax due as well as the date of payment from the user.

Written by Lucy King

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