Penalties & Interest

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Late Filing

If you do not complete your tax preparation on time or file your return by the due date, you may be subject to a failure-to-file penalty and interest. To avoid penalties and interest, it is recommended that you file for an extension by April 15.

If you are due a refund, but you did not file a tax return, you must file within three years from the date the return was originally due to obtain that refund.

Late Payment

If you file on time but don’t pay all amounts due on time, you’ll generally have to pay a late payment penalty of one–half of one percent (0.5%) of the actual tax owed for each month, or part of a month, that the tax remains unpaid from the due date, until the tax is paid in full. There is no maximum limit to the failure-to-pay penalty.  

Failure to pay taxes can create serious complications to your financial health. In addition to penalties, you can face interest on your debt as well as collection action from the IRS.

Interest

When you file your tax return late, you'll be charged interest on any unpaid balance. Interest accrues on the unpaid balance and compounds daily from the due date of the return (without regard to any extension of time to file) until you pay the balance in full.

  • The interest rate is the federal short-term rate plus 3%.
  • The federal short-term rate is determined every three months.