July 2011
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by Devon Weaver, Keeping Tabs Accounting
Facts On Penalties
4. If you file your return more than 60 days after the
due date or extended due date, the minimum penalty
is the smaller of $135 or 100 percent of the unpaid tax.
5. If you do not pay your taxes by the due date, you
will generally have to pay a failure-to-pay penalty of .5%
of your unpaid taxes for each month or part of a month
after the due date that the taxes are not paid. This penalty
can be as much as 25 percent of your unpaid taxes.
6. If you timely filed a request for an extension
of time to file and you paid at least 90 percent of your
actual tax liability by the original due date, you will not
be faced with a failure-to-pay penalty if the remaining
balance is paid by the extended due date.
7. If both the failure-to-file penalty and the failureto-pay penalty apply in any month, the 5 percent failureto-file penalty is reduced by the failure-to-pay penalty.
However, if you file your return more than 60 days
after the due date or extended due date, the minimum
penalty is the smaller of $135 or 100% of the unpaid tax.
8. You will not have to pay a failure-to-file or
failure-to-pay penalty if you can show that you failed
to file or pay on time because of reasonable cause and
not because of willful neglect.
Tax Corner · Tax Corner · Tax Corner · Tax Corner
What Are the Chances of Being Audited?
Page 43
Each year, the IRS releases a publication entitled
the “Data Book.” The 2010 version of the book was
released in early March, which provides statistical data
on its fiscal year (FY) 2010 audit activities.
Keep in mind that audits usually occur one to two
years after the return is filed. The data found in the
2010 Data Book is based upon returns filed in calendar
year 2009, which will be predominantly 2008 returns,
and audited in fiscal year 2010. Year-to-year changes
are compared to returns filed in 2008, and audited in
fiscal year 2010, which are predominantly 2007 returns.
Overall chance of being audited – Out of 142,823,105
total individual income tax returns filed in 2009, 1,581,394
were audited. This works out to roughly 1.1%, a bit
higher than the 1% rate for the previous year. But the
overall audit percentage can be misleading because
certain types of returns are audited more frequently than
others. For example, 473,999 (30%) were for returns
that included an earned income tax credit (EITC) claim.
Phone: 260-463-4901 • Fax 888-439-6528 • The Hometown Treasure
When it comes to filing a
tax return – or not filing one the IRS can assess a penalty if
you fail to file, fail to pay or
both. Here are important points the IRS wants you to
know about the two different penalties you may face
if you do not file or pay timely.
1. If you do not file by the deadline, you might
face a failure-to-file penalty. If you do not pay by the
due date, you could face a failure-to-pay penalty.
2. The failure-to-file penalty is generally more
than the failure-to-pay penalty. So if you cannot pay all
the taxes you owe, you should still file your tax return
on time and explore other payment options in the
meantime. The IRS will work with you.
3. The penalty for filing late is usually 5 percent
of the unpaid taxes for each month or part of a month
that a return is late. This penalty will not exceed 25
percent of your unpaid taxes.