Everything You Must Understand About the Types of Penalties

Penalties are added to your tax debt by IRS personnelor computer until it's settled in full, so your IRS issue is always growing.

The IRS relies on penalties for additional revenue and to dissuade taxpayers from neglecting tax settlements.

Categories of Penalties

• Combined Penalties
• Late Filing of Tax Return Penalties
• Failure to Pay Taxes Penalties
• Fraud Penalties
• Accuracy Penalties

Understatement of your tax return's income tax liability is subject to accuracy penalty of twenty per cent.

Fraud penalties are assessed if you fraudulently omitted or understated your income on your return. This equals 75% of the underreported figure.

Failure to pay taxes have penalties from 0.25% to one per cent per month. Subsequently assessed to your debt every 16th of the month, it commences at 0.50% on April 16. It can be raised to 1% if a Notice of Intent to Levy is served or decreased to 0.25% if an installment agreement is agreed upon.

Late filing of tax return penalties are imposed at 5% montly on the balance due, up to twenty-five per cent of the sum.

A combination of penalties are combined penalties. They grow quick if piled on top of one another.

Penalties can be cancelled if you received incorrect advice from an IRS official, but you should prove that you disclosed accurate information.

If you can provide reasonable cause why you didn't comply with the tax law in writing, penalties can be eliminated or minimized.

Reasonable cause proves that you had a good reason for failing to act, be it medical, personal, or financial problems, as long as you behaved with "ordinary business care and prudence."

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