IRS penalties are imposed as a deterrent against tax evasion and for encouragement of voluntary compliance. There are more than 140 penalty provisions under the IRS regulations. The most common form of penalties is given below.
The fraudulent return penalty is 75% of the short payment of tax due to fraud on the part of the taxpayer. The fraudulent failure to file return penalty can also go maximum up to 75%. The penalty for failure to file timely return is 5% of the returnable income per month of delay subject to a maximum of 25%. The penalty for default in timely payment of tax is 0.5% per month subject to a ceiling of maximum 25% of the tax due amount shown on the return.
The penalty for deviation from accuracy is 25% of the understatement of tax liability. Such inaccuracy also includes within its scope valuation misstatement, overstatement of pension liabilities or substantial valuation error of gift tax or wealth tax.
(More:http://www.irs.gov/irm/part20/index.html
http://www.irs.gov/taxtopics/tc653.html)
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