If you filed your federal or state return with a balance due, you may be subject to penalties and interest. Even if you choose to electronically pay your balance due with your filed return, you still may be subject to penalties and interest.

The taxing authorities will mail you a bill for these amounts; please do not be surprised if you receive one in the mail. 

Common IRS Penalties

Failure to File Penalty

If a return is not filed by the due date (or by the extended due date if you applied for an extension), then you will be subject to the Failure to File Penalty.

Failure to Pay Penalty

If your entire balance due is not received by the IRS by the due date, then you will be subject to the Failure to Pay Penalty.

Underpayment Penalty

The IRS is a “pay-as-you-go” system. This means that you must either pay your tax via wage/retirement withholdings or make quarterly estimated tax payments if you have other income that is not subject to withholding (self-employment income, investment income, gambling income, etc.). If you are underwithheld on your wages/retirement income or if you have other income that is not subject to withholdings and you do not make timely quarterly estimated tax payments, then you may be subject to this penalty.

Interest on IRS Penalties

The IRS is required by statute to charge interest on penalties. The interest rate is determined quarterly and published publicly in the Federal Register. 

IRS Penalty and Interest Abatement

Certain situations qualify for abatement (removal) of IRS penalties and the associated interest attributable to these penalties. For a separate fee, Sunshine Tax Relief can be retained to seek removal of these penalties if you qualify for abatement.