IRS Failure to File

All U.S. citizens and residents are required to file federal taxes every year. If you don't file a tax return with the Internal Revenue Service (IRS), you may receive a failure-to-file penalty. It's never wise to put off filing your taxes, as late fees and interest can significantly increase your tax burden.

To avoid the failure-to-file penalty, always file your tax returns by their due date. If you need help filing or you've received the failure-to-file penalty, you can consult with an experienced California tax attorney.

What Is the Failure-to-File Penalty?

When you don't file your tax return, either willfully or unintentionally, the IRS will penalize you. The failure-to-file penalty is 5% of the tax owed for every month your tax debt is unpaid. The penalty maxes out at 25% after five months.

Income tax returns are also subject to a minimum late filing penalty when filed more than 60 days after the return due date, including extensions. The minimum penalty is the LESSER of two amounts – 100% of the tax required to be shown on the return that you didn't pay on time, or a specific dollar amount that is adjusted annually for inflation. The specific dollar amounts are:

  • $435 for returns due on or after 1/1/2020*
  • $210 for returns due between 1/1/2018 and 12/31/2019
  • $205 for returns due between 1/1/2016 and 12/31/2017
  • $135 for returns due between 1/1/2009 and 12/31/2015
  • $100 for returns due before 1/1/2009

The minimum fee is $435 or 100% of the tax due.

Is There a Failure-to-File Penalty if You Don't Owe Taxes?

Even if you don't owe any taxes, you must still file a federal tax return each year. But there's no failure-to-file penalty for not filing if you don't owe the government any taxes. Filing a return each year is still a good idea because you might receive a refund if you do. Not having updated tax returns could also pose problems for you if you ever get into tax trouble later.

Requesting an Extension

Individuals may request a six-month extension to file their taxes until October 15. While filing your return by the extended deadline exempts you from receiving the failure-to-file penalty, it does not allow you to pay your taxes late. The extension is for filing your taxes, not paying your taxes.

If you don't pay your taxes until October 15, you could be liable for late fees and interest accrued on the tax amount. Failing to file your return by the extended deadline could result in a failure-to-file fee as well.

Americans Abroad

If you're a U.S. citizen living and working outside the U.S., you automatically receive a two-month extension to file your taxes. Again, this extension is for filing your return, not paying your taxes.

Failure to File and Good Cause

The IRS might abate your failure-to-file penalty if you can prove that you didn't neglect to file your return willfully. You can demonstrate your honest intentions by making a good faith payment as soon as possible. This payment will show the IRS that your failure to file wasn't intentional and may help your chances of getting an abatement. Your tax representative can discuss good cause options with you to determine the best course of action.

Need Help with the Failure-to-File Penalty?

If the IRS has hit you with a failure-to-file penalty, it can seem overwhelming. You do have options, and an experienced tax professional can let you know what they are. Contact a California Tax Attorney today to set up a consultation.

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