Penalties & Interest

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Interest - Per annum, compounded daily (changes quarterly based on Federal Short-Term rates)

4%

Late Filing Penalty

5% per mo. or any portion thereof.  Max accumulative of 25%

Late Payment Penalty

0.5% per mo. or any portion thereof.  Max accumulative of 25%

Accuracy Related Penalty

20%

Negligence Penalty

25%

Civil Fraud Penalty

75%

 

Interest - charged on the unpaid tax and penalty balances.  The rate of interest changes each calendar quarter.

Late Filing Penalty - charged for not filing a tax return or an appropriate extension by the due date. This is the penalty that accumulates the fastest. File on time even if you can't pay.

Late Payment Penalty - charged for not paying tax due on a return by the due date.

Accuracy Related Penalty - charged for inaccurate or sloppy records that result in an incorrect tax liability being reported.

Negligence Penalty - charged for reporting items incorrectly due to lack of concern for accurate records. You may be able to negotiate this down to the lesser Accuracy Related Penalty.

Civil Fraud Penalty - charged for deliberately reporting items incorrectly.  You may be able to negotiate this down to the lesser Negligence or Accuracy Related Penalties.


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