Previous posts on this blog have talked about how people accused of tax evasion and other serious malfeasance with respect to their tax obligations may face severe penalties, including the possibility of criminal charges being filed against them.
However, Frankfort, Illinois, residents should not lose sight of the substantial penalties the Internal Revenue Service, or IRS, will impose for much more common and minor offenses.
For instance, failing to file a tax return on time results in the assessment of a 5 percent penalty on the amount of tax that went both unreported and unpaid, although this amount may be reduced to avoid duplication with other penalties.
Likewise, failing to pay taxes when due will ordinarily result in a ½ percent penalty on the tax due for every month, or partial month, the tax goes unpaid. The maximum penalty is 25 percent of the balance owing. Penalties also apply if a person is supposed to pay quarterly estimated taxes but fails to do so.
These penalties can prove to be quite expensive, especially when one owes a lot in taxes. Moreover, these penalties can take one by surprise since they apply, at least to some extent, to situations in which the IRS determines that additional taxes are due after they conduct an audit. Finally, it is important to keep in mind that these penalties apply over and above the interest the IRS will also charge on the taxes they are owed.
For a lot of reasons, a taxpayer in the Chicago area may find himself or herself on the receiving end of tax penalties, even when the person is honestly trying to report and pay their taxes as required. It may be important to get the help of an experienced tax attorney in seeking a reduction in penalties or other relief.