Tax problems can have many significant ramifications for a person. For one, they could lead to tax penalties. There are a range of different things the Internal Revenue Service can issue penalties for. Today, we will go over some of the more common ones.
For one, taxpayers being late in filing their taxes generally triggers a penalty. This includes if they missed the initial filing deadline without being given an extension. It also includes if they were given an extension and then missed the extended filing deadline.
Also, taxpayers accused of not paying their taxes on time generally face penalties. There are penalties for failing to pay one’s taxes by the initial filing deadline (as a note, extensions generally just apply to the filing of taxes, not the paying of taxes). Another type of penalty some could face is a penalty for failing to pay an estimated tax.
There are also a range of miscellaneous situations that could result in tax penalties. One is if a check you used to pay a federal tax bill ends up bouncing.
How much a tax penalty is varies based on what the penalty is for. Also, what the penalty is for will impact whether the penalty is just charged once or is charged monthly.
So, how severe of financial impacts an IRS tax penalty could have can vary considerably. Sometimes, such penalties can add up to very high levels.
The specific circumstances of a person assessed a tax penalty also impacts his or her options. There are situations in which penalties can be contested or relief from such penalties could be granted. Skilled tax attorneys can advise taxpayers on whether they would have a strong basis for challenging or seeking relief from a tax penalty.