IRS Penalty Relief Information: Penalties Eligible for Relief – Failure to File Penalty (Part 1 – A)

The failure to file penalty applies if you don’t file your tax return by the due date (including
extensions).

How you know you owe the penalty
The IRS will send you a notice or letter if you owe the failure to file penalty.

Penalty amount
The failure to file penalty amount depends on the type of tax return you file.
The penalty applies to individuals and businesses that fail to file forms including, but not limited
to Form 1040, U.S. Individual Income Tax Return and Form 1120, U.S. Corporation Income Tax
Return.
The penalty doesn’t apply if you can show the failure was due to reasonable cause.

How we calculate the penalty
The penalty is 5% of the tax due (less any tax paid on time and available credits) for each month
or partial month the return is late. The penalty accrues up to a maximum of 25%.

The IRS will calculate the failure to file penalty in the following way:
 Tax required to be shown on the return,
 Less any tax paid on time (example: withholding credits or estimated tax payments),
 Less available refundable credits, then
 Multiplied by 5% per month (up to 25%).

If the return is more than 60 days late, the minimum penalty is the amount listed or 100% of the
underpayment, whichever is less.

Next week TTT will explore Penalties eligible for relief – Failure to file (cont.)
(www.irs.gov – Penalties 10/8/24)) (TTT 021125)