How IRS Penalties and Interest Involve You

Penalties and interest are continuously accruing if you have back taxes or have not filed your taxes for a long time. Our company can help you solve this IRS issue.

If you are filing a tax return late and it has an amount due or you have back taxes, the IRS will add both penalties and interest to what you need to pay. You may also receive a penalty if you fail to file the right tax form. Penalties are automatically added and are used to punish late taxpayers.

Types of Penalties

• Accuracy ? 20% penalty added to your bill for understated income on your return
• Fraud ? 75% for a fraudulently filed tax return
• Failure to File Penalty ? five per cent to twenty-five per cent every month for late filing
• Failure to Pay Penalty ? 0.25% to 1% every month for failure to pay on time
• Combined. If you file late and pay late the penalty is 5% every month.

The penalties are pretty heavy, when you think about it. If you feel that you're going to need more time to prepare your return, file an extension. Your Failure to File Penalty will be eliminated, or at least reduced.

It is important to note that if you have a refund coming and file late, there is no penalty charged because penalties are calculated from the amount that is due.

Interest Facts

Penalties and interest will be calculated, as the IRS considers tax debt borrowed money. The interest rate formula was set by Congress and adjusted every quarter and compounded daily, ranging from 4% to 10% each year.

Often the only way to get interest abated from your tax debt is if it was charged as an IRS error. You may be successful if one of these situations occur:

• The interest should be cancelled if a tax or penalty is abated. Check your tax bill to make sure it is removed.
• You shouldn't need to pay interest charges if they were a due to IRS delays.
• If the IRS determines that you won't be able to settle the tax and interest, an Offer in Compromise will decrease your bill.
• Your last option is filing for bankruptcy.

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Originally posted 2007-11-25 04:05:30. Republished by Blog Post Promoter

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