Many Florida taxpayers find themselves in a difficult position when they fail to file their tax return or pay the appropriate taxes on time. The penalty for failing to file your tax return on time is 5 percent of the unpaid taxes for each month that the return is late (not to exceed 25 percent of the unpaid taxes). The penalty for failing to pay your taxes on time is generally ½ of 1 percent of the unpaid tax for each month that the tax is not paid (not to exceed 25 percent of the unpaid taxes). This penalty may be assessed from the original due date even if you requested and were granted an extension of time to file your tax return.
The IRS typically charges interest in addition to the aforementioned penalties. The interest compounds daily. For individual taxpayers, the interest rate is generally equal to the federal short-term rate – as determined quarterly – plus 3 percent. The result of the accruing penalties and interest often times feels like an insurmountable problem for many Florida taxpayers.
The IRS does offer some potential for relief from the penalties. For instance, some taxpayers may qualify for penalty abatement for cause or pursuant to the IRS’s First Time Penalty Abatement Policy. You can find more information regarding the IRS penalty abatement here: https://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Penalty-Relief-Due-to-First-Time-Penalty-Abatement-or-Other-Administrative-Waiver.
As always, if you find yourself having issues with the IRS, you should contact a licensed Florida tax attorney who can assist you with your matter.