Avoid the Fastest Growing Penalty

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Avoid the Fastest Growing Penalty

Save yourself a lot of money

The late filing penalty is the fastest growing penalty the Internal Revenue Service and State has. It accumulates at 5% per month, or any portion thereof (including 1 day!), and max's out at 25%. On top of that, they charge interest on the penalty!

How to avoid it.
File on time even if you can't pay it. If you are unable to reasonably determine your tax by filing day, file an extension. That will at least avoid the late filing penalty. There is no extension for payment of a tax and you will still incur the late payment penalty. But that's only 0.5% per month. That drops to 0.25% when you enter into an agreement with them. (States may vary.)

If you missed it or couldn't avoid it, there may still be relief. Request an abatement if you had 'reasonable cause.' That can be a subjective term.  :-/  What this means is 'if there was an event beyond your control that made it impossible to file or pay a tax on time' you may qualify for an abatement.

 


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