BURBANK PENALTY AND INTEREST ABATEMENT
What to Know About IRS Penalties and Interest in Burbank
Interest and penalties can significantly increase a taxpayers IRS liability. The agency regularly applies multiple penalties and interest to back taxes, thus making it more difficult for individual and business taxpayers to pay their outstanding liability. IRS penalties are mandated by the Internal Revenue Code (IRC), and are most commonly assessed against taxpayers for failure to timely file a tax return, underpayment or nonpayment of taxes, and failure to make payroll tax deposits. Interest is not only applied to any unpaid tax, but also to the penalties themselves.
How much is the penalty and interest?
When a taxpayer fails to file a timely return and pay the taxes when due, the IRS charges a five percent (5%) penalty for filing the late return and a half percent (1/2%) penalty for paying the taxes late. Both the failure-to-file penalty and the failure-to-pay penalty are charged for each full month, or partial month, the return or payment is late, up to 25%. The amount of interest charged by the IRS is determined on a quarterly basis and is calculated from the original due date of the return, regardless of extensions. For underpayments of tax, the interest rate is usually between two to three percent (2-3%), and is compounded daily.
How can I get relief from IRS penalties and interest?
Taxpayers can easily prevent the assessment of penalties and interest by ensuring their tax returns are filed and paid in a timely manner. For those taxpayers that cannot file by the return due date of April 15th, a filing extension can be requested using Form 4868, allowing for six (6) more months to file. Bear in mind, however, that the extension only extends the time to file your return and does not affect the April 15th deadline to pay your taxes. Wage earners and self-employed taxpayers can protect themselves against the failure-to-pay penalty by ensuring they have sufficient withholding and estimated tax payments, respectively. In cases where penalties and interest have already been assessed, the IRS will consider a full or partial abatement if a taxpayer meets reasonable cause criteria.
If you need help with penalties and interest in Burbank, contact us today at 1-714-382-6780 for a complimentary, confidential assessment with skilled Burbank CPAs, enrolled agents, and tax attorneys.
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