The Various Types Of Income Tax PenaltiesThe Internal Revenue Service has made provisions for a number of income tax penalties to be paid, if anyone defaults in the payment of taxes. These income tax penalties allow the IRS to motivate people to pay their taxes in time.
The most common of income tax penalties is one that is levied when the taxpayer does not file the tax return at all by the due date. This income tax penalty is levied at the rate of 5% of the tax not paid by the due date for each month or part of a month that the return is late, subject to a maximum of 25% of the total tax amount in question. This penalty cannot be levied provided the tax payer can show a logical reason for failure to file the return.
Another income tax penalty is levied when the taxpayer fails to pay the tax amount. This tax penalty is 1/2 of 1% of your unpaid taxes for each month or part of a month after the due date that the tax is not paid, subject to a maximum of 25% of your unpaid tax. As is the case above, if the assessee can show a logical reason for failure to pay the tax, it will free the assessee from this income tax penalty. This penalty is also levied with the penalty on back taxes. Another type of income tax penalty is levied in case a frivolous return is filed. The maximum amount of this penalty is $500, if the return is found to be erroneous on the part of the taxpayer or is delayed so as to hamper the federal income tax law. Apart from this, other penalties related to fraud are also applicable There are certain accuracy-related tax penalties, which are levied because of underpayment of taxes due to negligent observation of rules and regulations regarding statement of income tax as well as other conditions related to the accuracy of information provided by the assessee to the IRS. Apart from this, IRS penalties are also levied in case of negligence or disregard for the clauses of the Internal Revenue Code. Other income tax penalties are levied on the individual taxpayer, in case the tax payer claims the tax to be lesser by $5000 or 90% of what the actual tax would have been. All of these, among many others, form the civil income tax penalties. There are also criminal income tax penalties. Criminal penalties will be decided, if you are tried and are found guilty of evading tax, and are found to have willfully failed to file the tax return or not to have provided any information as might be required, or filed or attempted to file a return that is fraudulent, or made fraudulent or false statements, or failed to pay taxes. |