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You filed on time but didn't pay all
of your balance due.
It is best to file on time and pay as much of your balance
as possible. Why? Interest, compounded daily, is charged on
any unpaid tax from the due date of the return until the date
of payment. The interest rate is 5 percent for the first quarter
of 2005; the rate is adjusted every three months. If you filed
on time but didn't pay on time, you'll generally have to pay
a late-payment penalty of one-half of one percent of the tax
owed for each month, or part of a month, that the tax remains
unpaid after the due date, up to 25 percent. The one-half
of one percent rate increases to one percent if the tax remains
unpaid after several bills have been sent to you and the IRS
issues a notice of intent to levy.
You haven't filed or paid your balance
due.
If you did not file on time, and you owe tax, you may owe
an additional penalty for failure to file unless you can show
reasonable cause. The combined penalty is 5 percent (4.5 percent
late filing, 0.5 percent late payment) for each month, or
part of a month, that your return is late, up to 25 percent.
The late-filing penalty applies to both the tax shown on your
return and any additional tax found to be due (reduced by
withheld and paid tax amounts). After five months, if you
still have not paid, the 0.5 percent failure-to-pay penalty
continues to run, up to 25 percent, until the tax is paid.
Also, if your return is over 60 days late, the minimum failure-to-file
penalty is the smaller of $100 or 100 percent of the tax required
to be shown on the return.
You Requested an IRS Installment Agreement
If you or your tax professional filed Form 9465 requesting
an installment payment plan, and the IRS accepted your installment
payment plan, they will charge you a $43 administrative fee,
plus interest on the unpaid tax and you will be expected to
have the taxes paid by January 15th of next year. If you filed
a timely return and are paying your tax due according to an
installment agreement, the penalty is one quarter of one percent
for each month, or part of a month, that the tax remains unpaid.
Still don't know what to do? Contact us
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