The Failure to File Penalty applies if you don’t file your tax return by the due date. The Failure to File Penalty is 5% of the unpaid taxes for each month or part of a month that a tax return is late. The penalty won’t exceed 25% of your unpaid taxes.
How You Know You Owe the Penalty
We send you a notice or letter if you owe the Failure to File Penalty. For more information, see Understanding Your IRS Notice or Letter.
How We Calculate the Penalty
IRS calculates the Failure to File Penalty based on how late you file your tax return and the amount of unpaid tax as of the original payment due date (not the extension due date). Unpaid tax is the total tax required to be shown on your return minus amounts paid through withholding, estimated tax payments and allowed refundable credits.
IRS calculates the Failure to File Penalty in this way:
- The Failure to File Penalty is 5% of the unpaid taxes for each month or part of a month that a tax return is late. The penalty won’t exceed 25% of your unpaid taxes.
- If both a Failure to File and a Failure to Pay Penalty is applied in the same month, the Failure to File Penalty is reduced by the amount of the Failure to Pay Penalty for that month, for a combined penalty of 5% for each month or part of a month that your return was late.
- If after 5 months you still haven’t paid, the Failure to File Penalty will max out, but the Failure to Pay Penalty continues until the tax is paid, up to its maximum of 25% of the unpaid tax as of the due date.
- If your return was over 60 days late, the minimum Failure to File Penalty is $435 (for tax returns required to be filed in 2020, 2021 and 2022) or 100% of the tax required to be shown on the return, whichever is less.
Interest on a Penalty
IRS charges interest on penalties. The date from which we begin to charge interest varies by the type of penalty. Interest increases the amount you owe until you pay your balance in full. For more information about the interest we charge on penalties, see Interest on Underpayments and Overpayments.
Pay a Penalty
Send IRS a payment or pay your taxes in full to stop future penalties and interest from adding up. NexGen Taxes Pro can help you negotiate a payment plan.
Remove or Reduce a Penalty
IRS may be able to remove or reduce some penalties if you acted in good faith and can show reasonable cause for why you weren’t able to meet your tax obligations. By law, IRS cannot remove or reduce interest unless the penalty is removed or reduced.
For more information, see penalty relief.