J.K. Lasser's Your Income Tax 2013: For Preparing Your 2012 Tax Return

46.9 Tax Penalties for Late Filing and Late Payment

Late filing.

If your return is filed late without reasonable cause, the IRS may impose a penalty of 5% of the net tax due for each month the return is late, with a maximum penalty of 25%. If the return is more than 60 days late, there is a minimum penalty, equal to the smaller of $135 and 100% of the tax due. In one case, the IRS tried to impose the minimum penalty on a taxpayer who did not owe any tax because her withholdings exceeded her liability. However, the Tax Court held that the minimum penalty does not apply unless tax is underpaid. The IRS has agreed to follow the decision.

If failure to file is fraudulent, the monthly penalty is 15% of the net tax due, with a maximum penalty of 75%.

If you are subject to penalties for both late payment and late filing, the 0.5% penalty for late payment (but not the 1% penalty) offsets the penalty for late filing during the period that the penalties run concurrently.

Late payments.

If you are late in paying your taxes, a monthly penalty of 0.5% (½ of 1%) is imposed on the net amount of tax due and not paid by the due date. The maximum penalty is 25% of the tax due. The penalty is in addition to the regular interest charge. This penalty does not apply to the estimated tax (27.1). The late payment penalty does not apply if you can show that the failure to pay is due to reasonable cause and not to willful neglect.

A special reasonable cause rule applies if you obtain a filing extension. ...