Failure to Pay & File Penalty Calculator


IRS tax penalty calculator is an online tool to compute the amount of penalty that the IRS may impose for your failure to file a tax return by the due date and for failure to pay the tax within time. The penalty calculator created by us will help you compute the penalty for failure to file or failure to pay by taking into account the following circumstances :

IRS tax penalty calculator

IRS tax penalty calculator computes both the failure to file penalty as well as failure to pay penalty. So , basically same inputs provides you two kinds of computation.

Failure-to-Pay vs the Failure-to-File Penalty, What is the difference ?

Basically , if you file tax return late or do not file tax return at all, you will surely be charged with a penalty for failure to file tax return. Now, if you filed tax return and there was tax due as per return and you did not pay tax by the tax filing due date , you will be liable for failure to pay tax. You may also be liable to pay penalty for failure to pay tax that was determined by the IRS after processing your tax return.

How Failure to File Penalty Calculated?

IRS tax penalty calculator computes failure to file penalty amount when you file tax return beyond the tax filing due date or extended date or for do not file a tax return without a reasonable cause for filing late. The calculation of penalty for failure to file takes into account the following rules:

  • The failure to file penalty rate is 5% of the unpaid taxes for each month or part of a month that a tax return is late.
  • The penalty won’t exceed 25% of your unpaid taxes.
  • When a taxpayer is charged with a penalty for both types of failures i.e failure to file as well as failure to pay -the rate of failure to pay penalty is reduced by 0.5 % for months when both penalties are imposed. Thus the combined penalty is 5% (4.5% late filing and 0.5% late payment per month. The maximum total penalty for both failures is 47.5% (22.5% late filing and 25% late payment) of the tax.
  • If the delay in filing tax return is over 60 days late, the minimum failure-to-file penalty is the smaller of $435 or 100% tax due.

Method Employed by IRS tax penalty calculator

When you fail to pay tax due – as per your return or as per the demand notice by IRS , you pay failure to pay penalty. Following rules affect computation of this penalty

  • The rate of late payment penalty is 0.5% of the tax owed
  • Even one day counts as a month.
  • The maximum possible penalty for failure to pay is 25% of the tax due.
  • The rate of penalty is generally 0.5%. But this rate changes in the following circumstances
    • 10 days after the IRS issues a final notice of intent to levy or seize property, the 0.5% rate increases to 1% per month.
    • If there is an instalment agreement with IRS, the penalty rate is 0.25% for each month or part of a month as long as that instalment agreement is in force.

Is failure to pay penalty and underpayment penalty the same ?

IRS imposes an “underpayment penalty,” if a person fails to make estimated tax payments either fully or to the extent of periodic estimated taxes throughout the year. However, failure to pay penalty relates to taxes that you determine as payable while filing tax return or IRS has raised a bill after processing your tax return.a

First Time Penalty Abatement

If you failed to pay in time, it is not that you can not get waiver of such a penalty.Under the Internal Revenue Code, there are two ways to get that penalty for failure to pay removed. One is by explaining IRS the reasonable cause for failure to pay and the second is totally at discretion of IRS to all you a first-time penalty abatement under which you may qualify if certain conditions are fulfilled. Please read this post on first time penalty abatement.

Which provision of law handles failure to pay & file penalty?

Failure to file penalty is dealt under IRC § 6651(a)(1) where as law for imposing penalty for failure to pay tax as per your return is provided under IRC § 6651(a)(2).

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