Penalties Feed

In February 2022, the Internal Revenue Service stopped issuing several automatic tax notices. The move was prompted in large part by the massive backlog of tax filings that piled up when the agency closed offices as a precaution early in the COVID-19 pandemic. That tax notice moratorium is ending. Automated collection notices will soon show up in the mailboxes of individuals with tax debts prior to tax year 2022. Businesses, tax exempt organizations, trusts, and estates with tax debts prior to 2023, with exceptions for those with existing debt in multiple years, also are on the notice resumption list. These... Read more →


You probably are getting ready for the three-day weekend coming up with the Rev. Dr. Martin Luther King, Jr. federal holiday on Monday, Jan. 15. But if you pay estimated taxes, you also know that date usually is the deadline for the prior tax year's fourth payment. Since it's MLK Day this year, this due date is pushed to the next business day, Tuesday, Jan. 16. You need to meet that final deadline to avoid a possible tax bill or penalty (or both) when your file your 2023 tax return later this year. Why estimated tax? Most of us pay... Read more →


To ensure you have the type of retirement you want, you must do some calculations, including figuring how your required minimum distributions fit in, financially and tax-wise. (Photo via Unsplash+ in collaboration with Getty Images) Retirement savings can make a big difference in how enjoyable your post-work years will be. If you have tax-deferred retirement accounts, those savings also present new tax responsibilities once you reach a certain age. Some money in a traditional IRA that's been out of the Internal Revenue Service's reach for years must be taken out as a required minimum distribution, or RMD. Uncle Sam also... Read more →


Most of us are wrapping up year-end tax tasks (in between wrapping presents!). Others, and there is some overlap, are getting ready for the New Year and the start of the 2024 tax filing season. And some of us are still dealing with 2020 and 2021 tax issues. In many of these years-old cases, the issue is tax penalties assessed during the COVID-19 pandemic chaos that affected normal tax filing and processing. Today, the Internal Revenue Service announced it is providing $1 billion in penalty relief to those taxpayers, who number around 4.7 million. The relief receiving taxpayers include individuals,... Read more →


Tax mistakes, unintentional or otherwise, mean penalties when discovered by the IRS. And the amounts could add up. (Photo by Polina Tankilevitch) The United States' tax system depends on voluntary compliance by taxpayers. But Uncle Sam is no fool. He and his tax collectors are believers of the adage "trust, but verify." The Internal Revenue Service also follows up on that verification with penalties when it finds taxpayers — and the professionals we pay to take care of our taxes — aren't fulfilling our tax responsibilities on our own. The most severe punishments come via criminal tax prosecutions. The IRS... Read more →


Tax time is almost up if you got a filing extension. (Unsplash+ in collaboration with Getty Images) It is Tax Day if you got an extension to file your 2022 tax return. Leading up to this Oct. 16 filing deadline, the ol' blog has been offering tips on how to finish up that Form 1040. They include — 8 tax tips for filers facing Oct. 16 extension deadline 10 often overlooked tax breaks 10 common tax filing mistakes Self-employment retirement plans with Oct. 16 contribution deadlines Free File 2023 still open, with 7 companies offering 9 no-cost tax prep/e-file options... Read more →


The Sept. 15 deadline for paying the third installment of 2023's estimated taxes is just days away. Make sure you meet it. Also make sure you pay the correct amount. If when all is said and filed at tax time, you owe the U.S. Treasury $1,000 or more, you could face a penalty for underpaying your taxes. And where that taxable money was from sources not subject to withholding, you also could face late-payment fines for not remitting it during the proper estimated tax quarters. Estimated tax safe harbors: Most of us who must pay estimated taxes calculate that expected... Read more →


Many taxpayers already are unhappy with the assistance they get from the IRS during filing season. Will that frustration be compounded if/when the tax agency implements its own direct tax preparation and e-filing system? My guess is yes. (Unsplash+ in collaboration with Getty Images) It's the middle of July, so most of us aren't thinking about how we'll file our tax return next year. But A U.S. senator and intern at a Washington, D.C.-based tax policy think tank are. And both oppose the Internal Revenue Service getting more directly involved in our filing lives. Idaho Republican Sen. Mike Crapo cuts... Read more →


International air carriers on tarmac photo by Marek Ślusarczyk via Wikipedia Got summer plans? Or maybe they're just wishes. Eighty-five percent of those who participated in a recent survey by the digital financial services company Ally said they wanted to travel, but financial concerns are putting the brakes on their trips. And if your dream excursion is beyond U.S. borders, another fiscal issue could keep you grounded. The U.S. Department of State can pull your passport or prevent its issuance or renewal if you have a substantial unpaid federal tax bill. Tax amounts that will curb travel: So what exactly... Read more →


Photo by Leeloo Thefirst Tax Day 2023 came and went and you weren't part of the annual tax-filing party. That means the Internal Revenue Service has been toting up penalty and interest charges you now owe on your unpaid tax. But you can stop that running number and avoid even larger noncompliance penalties if you do the job by June 14. Normal tax penalties: Under normal non-filing and non-payment calculations, the IRS assess two penalties. They can add up quickly. The late-filing penalty is 5 percent of the unpaid tax for each month or part of a month that an... Read more →


Photo by Markus Winkler Tax Day came and went, and you weren't part of the annual Internal Revenue Service's every earner is invited party. It happens. Maybe a personal emergency took precedence. Perhaps you meant to get the job done, but it took longer than you planned and exasperated, you just said, "Later!" Or you discovered you owe, but don't have the money and thought, "What's the point?" The point, regardless of why you didn't get your Form 1040 (or Form 4868 to get a six-month extension) to the IRS on time, is that your continued procrastination could cost you.... Read more →


Photo by Annie Spratt on Unsplash Unless we're getting a big refund, most of us put off dealing with our taxes. That's happening again this filing season. The Internal Revenue Service reports that through March 10, it had received 63.4 million returns. That's about the same number of returns it received at the same point last year. If 2023 filings continue to follow the 2022 pattern, then the IRS is still waiting for more than 100 million returns. Some people have good reasons for the delay. Their tax situations are complicated, taking time to sort through. Others are missing necessary... Read more →


The United States' tax system depends on voluntary compliance by taxpayers. But Uncle Sam is no fool. He and his tax collectors are believers of the adage "trust, but verify." The Internal Revenue Service also follows up on that verification with penalties when it finds taxpayers — and the professionals we pay to take care of our taxes — aren't fulfilling our tax responsibilities on our own. The most severe punishments come via criminal tax prosecutions. The IRS also employs civil actions to get due taxes. And many of us are familiar with the various fines and fees that are... Read more →


No person, place, or animal is left untouched after a natural disaster. Florida's cattle ranchers and other agribusinesses were slammed by Hurricane Ian. (Photo by Jo-Anne McArthur on Unsplash) Hurricane Ian hit southwest Florida around three weeks ago. The deadly storm moved across that state, and then, after entering the Atlantic, curved into the Carolinas for a second U.S. landfall. People are still in shock. Some are dealing with property still underwater. All are worrying about how they'll recover. The federal government, through the Federal Emergency Management Agency and Small Business Administration, is offering relief programs. Some folks are looking... Read more →


The October filing extension deadline, which falls on Oct. 17 this year since the 15th is Saturday, is less than a week away. The Internal Revenue Service is waiting on the uber procrastinators to get their filings in by next Monday. But the IRS isn't the only federal financial office awaiting postponed documents. FinCEN also demands extended FBAR filings be in by Oct. 17. Taxable money, but not an IRS issue: FBAR, or Report of Foreign Bank and Financial Accounts, is how FBAR information is the federal government's way of tracking foreign bank and financial accounts owned by U.S. taxpayers.... Read more →


If you've yet to file a 2019 or 2020 tax year return, you should get to work on that oversight soon. Like get them done by Sept. 30 soon. By meeting that end-of-this-month date, you may be able to avoid the usual late-filing penalty. It's typically assessed at a rate of 5 percent per month, up to 25 percent of the unpaid tax. And since the 2019 and 2020 due dates are long gone, that could be a substantial abated amount, depending on how much tax you owe. Helping both taxpayers and tax agency: The Internal Revenue Service's penalty relief... Read more →


Taxes and COVID-19 have been inextricably linked since the coronavirus reached the United States in 2020. Several federal relief packages were enacted, with the Internal Revenue Service given the task of distributing the payments. The agency had mixed success with this added responsibility. Then there was the backlog of filings that resulted from COVID-related IRS office closures. This was, by all accounts, an unmitigated disaster. The agency is still digging out of its coronavirus paperwork accumulation, and taxpayers are still dealing with problems created when automatic nonpayment penalty notices were issued. Now the IRS is trying to make that somewhat... Read more →


Barclays Bank building in Madrid (Photo by M.Peinado from Alcalá de Henares, España - 001782 - Madrid, CC BY 2.0) It's not a crime to put your money into legitimate foreign financial institutions. However, if the amount meets a certain threshold, you are required to report that money to the U.S. government. When U.S. taxpayers ignore this process, officially known as filing of a Report of Foreign Bank and Financial Accounts, or FBAR, they can face costly consequences. That's the case in the FBAR collection complaint filed Aug. 15 by federal officials seeking judgment against the defendant who, per the... Read more →


Was this you on Tax Day, struggling with your return? If you just decided to chuck it and you owe, you need to file by June 14 or face an added tax penalty. (Photo by Mikhail Nilov) Did you totally miss Tax Day? If so, and you owe the Internal Revenue Service a now overdue payment, the agency says it's not too late. In fact, if you pay up soon, specifically by next Tuesday, June 14, you'll avoid a larger noncompliance charge. Normal tax penalties: Under normal non-filing and non-payment calculations, the IRS assess two penalties. The late-filing penalty is... Read more →


via GIPHY So, you missed Tax Day. It happens. Don't panic. But don't dawdle. The Internal Revenue Service is serious about wanting your tax forms and, of course, any taxes you owe. If you miss the annual deadline, regardless of exactly when it falls, then you'll likely end up facing filing-related penalties, the harshest of which is for not filing at all. Below are four things you need to do now to get out of that penalty jam with as little damage as possible. Plus, there's a fifth tax move that could pay off for folks who aren't legally required... Read more →