Taxpayer Penalties
- Viktoriya Barsukova, EA, MBA
- Sep 11
- 3 min read
Penalty: 5% of the unpaid tax per month (or part thereof), up to a maximum of 25% of the tax due.
If more than 60 days late: the lesser of $485 or 100% of the tax due.
No penalty if you’re due a refund.
When both failure to file and failure to pay penalties apply in the same month, the failure-to-file penalty is reducedby the amount of the failure-to-pay penalty.
Penalty: 0.50% of the unpaid balance per month, capped at 25%.
Penalty: 15% of the unpaid tax per month, with a maximum of 75%.
Dependent on how late the deposit is:
2% if deposited within 5 days after the due date.
5% if deposited more than 5 but within 15 days late.
10% if deposited more than 15 days late.
Penalty per return, per year:
$60 if filed correctly within 30 days after the due date (max: $664,500; $232,500 for small businesses).
$130 if filed more than 30 days late but before August 1 (max: $1,993,500; $664,500 for small businesses).
$330 if filed after August 1 or not filed at all (max: $3,987,000; $1,329,000 for small businesses).
Minimum penalty of $660 if failure is due to intentional disregard.
Willful violations may result in:
Up to $591 per day in civil penalties.
A criminal fine of up to $10,000.
Up to 2 years in prison.
20% of the tax underpayment due to negligence, intentional disregard, or substantial understatement—defined as understatement exceeding the greater of 10% (or 5% in some cases, such as IRC § 199A) of the correct amount or $5,000.
75% of the understatement due to fraud is added as a penalty.
Felony: Max fine of $100,000 (or $500,000 for corporations), and/or up to 5 years in prison.
Felony: Up to $10,000 in fines and/or 5 years in prison.
Felony: Max $100,000 fine (or $500,000 for corp.) and/or up to 3 years in prison.
Reckless or intentional disregard: Ineligible for EIC for 2 years, even if eligible.
Fraud: Ineligible for 10 years, even if eligible.
Eligibility for administrative relief (abatement) for failure-to-file, failure-to-pay, and/or failure-to-deposit penalties if:
No penalties in the prior 3 tax years,
All current-year returns are filed (or extension requested),
Any tax due is paid.
FTA can be requested by phone or in writing.
Additional Context from IRS and Other Sources
According to the IRS, penalties vary by violation—e.g., a tax preparer failing to include a PTIN or sign a return may face $60 per failure, up to $31,500 for returns filed in 2025 .
Common taxpayer mistakes like failure to file are typically charged at 5% per month, capping at 25%, while failure to pay is 0.5% per month, also capping at 25% .
Summary Table (Taxpayer Penalties)
Issue | Penalty |
Failure to File | 5%/month, up to 25%; >60 days late: lesser of $485 or 100% of tax due |
Failure to Pay | 0.5%/month, up to 25% |
Fraudulent Failure to File | 15%/month, up to 75% |
Failure to Deposit Employment Tax | 2%, 5%, or 10% depending on how late deposit is |
Info Return/Payee Statement Fail | $60–$330 per return, high annual caps, minimum $660 if willful |
BOI Reporting Violation | $591/day civil; up to $10K fine; up to 2 years imprisonment |
Accuracy-Related Penalty | 20% of understatement |
Fraud Penalty | 75% of understatement |
Tax Evasion | Up to $100K fine (person), $500K (corp); up to 5 years prison |
Failure to Collect/Pay Over Tax | Up to $10K fine; up to 5 years prison |
Perjury/Fraud (False Return) | Up to $100K (person), $500K (corp); up to 3 years prison |
Fraudulent EIC Claim | 2–year or 10-year EIC ban depending on intent |
First-Time Abatement | Available if criteria met—no penalties in 3 prior years, returns paid/filed |
Taxpayer Penalties
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