Prevention is better than cure, but if circumstances prevent precaution, then here’s what you should know.
April 15 is the Tax Day deadline for most people. If you’re due a refund, there’s no penalty if you file a late tax
return. But if you owe taxes and you fail to file and pay on time, you’ll usually owe interest and penalties on the
taxes you pay late. But there are options available to mitigate the effect.

Here are eight facts the IRS explains that you should know about these penalties:

1. If you file late and owe federal taxes, two penalties may apply. The first is a failure-to-file penalty for late
filing. The second is a failure-to-pay penalty for paying late.

2. The failure-to-file penalty is usually much more than the failure-to-pay penalty. In most cases, it’s much
more, so if you can’t pay what you owe by the due date, you should still file your tax return on time and
pay as much as you can. You should try other options to pay, such as getting a loan or paying by
credit card. The IRS will work with you to help you resolve your tax debt. Most people can set up a
payment plan with the IRS using the Online Payment Agreement tool on IRS.gov.

3. The failure-to-file penalty is normally 5% of the unpaid taxes for each month or part of a month that a
tax return is late. It will not exceed 25% of your unpaid taxes.

4. If you file your return more than 60 days after the due date or extended due date, the minimum penalty
for late filing is the smaller of $525 or 100% of the unpaid tax.

5. The failure-to-pay penalty is generally 0.5% (one-half of one percent) per month of your unpaid taxes. It
applies for each month or part of a month your taxes remain unpaid and starts accruing the day after
taxes are due. It can build up to as much as 25% of your unpaid taxes.

6. If the 5% failure-to-file penalty and the 0.5% failure-to-pay penalty both apply in any month, the
combined maximum penalty charged for that month is 5% – specifically, 4.5% for failure-to-file and 0.5%
for failure-to-pay.

7. If you requested an extension of time to file your income tax return by the tax due date and paid at least
90% of the taxes you owe, you may not face a failure-to-pay penalty. However, you must pay the
remaining balance by the extended due date. You will owe interest on any taxes you pay after the
April 15 due date, even if you filed an extension.

8. You will not have to pay a failure-to-file or failure-to-pay penalty if you can show reasonable cause for
not filing or paying on time.

IRS Penalty Abatement Procedures

Taxpayers are often unaware that if they are late filing or paying for their tax return, and it causes penalties,
they may be able to get out of paying them. If you have demonstrated full compliance (meaning that you have
filed your tax returns and paid any tax that was owed) over the past three (3) years, you are then able to
request a waiver of the penalties.

The waiver is called First Time Abatement (FTA). The Internal Revenue Manual (IRM 20.1.1.3.3.2.1) tells
us this is IRS policy and is used to reward past tax-compliant taxpayers and to promote future compliance.

The Inspector General for Tax Administration (TIGTA) found that many taxpayers with compliant (good) tax
histories have not been offered, and do not receive, the FTA waiver from the IRS. So, if you receive a penalty
from the Internal Revenue Service (IRS) and you have been in full compliance for the past three years, you
should contact the IRS – either by calling the toll-free number on your notice or by sending a written request
using Form 843, Claim for Refund and Request for Abatement – to request abatement of (Failure to File —

FTF), (Failure to Deposit — FTD for businesses who pay payroll taxes or company estimated taxes) or (Failure
to Pay – FTP) penalties, whichever applies in your situation. These abatement requests are approved if you
meet the “clean” past 3-year rule.

This report shows that over 1.2 million taxpayers with failure-to-pay penalties alone did not receive penalty
relief, even though they were qualified for the FTA waiver. So, you must be sure to contact the IRS requesting
the abatement – it will not be automatically offered to you.

Remember, the IRS does not automatically try to help you out of trouble with taxes. You must exercise and
demand your rights. Those who sleep on their rights (meaning — those who do nothing), lose them.

Additionally, you should check with your state Franchise Tax Board or Department of Revenue to see if they
have a similar procedure or policy. Always consult with a tax professional before you pay any tax or penalties.
Tax professionals can save you more than they charge, in money, time, and peace of mind!

Call today, don’t delay! See how this affects you. We can be reached at 602-264-9331 and on all social media under azmoneyguy.

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