Taxpayers in the United States may face various penalties for failures related to Federal, state, and local tax matters. The Internal Revenue Service (IRS) is primarily responsible for initiating these penalties at the Federal level. The IRS can impose only those penalties specified in Federal tax law. State and local rules vary widely, are administered by state and local authorities, and are not discussed herein.
Penalties may be monetary, may involve forfeiture of property, or may even include jail time. Most monetary penalties are based on the amount of tax not properly paid. Penalties may increase with the period of nonpayment. Some penalties are fixed dollar amounts or fixed percentages of some measure required to be reported. Some penalties may be waived or abated where the taxpayer shows reasonable cause for the failure.
Penalties apply for failures to file income tax or information returns or filing incorrect returns. Some penalties may be very minor. Penalties apply for certain types of errors on tax returns, and may be substantial. Some penalties are imposed as excise taxes on particular transactions. Certain other penalties apply for other types of failures. Willful failures generally carry much higher penalty, which may include jail. In addition, certain criminal acts may result in forfeiture of property of the taxpayer.
Read more about IRS Penalties: Underestimate and Late Payment Penalties, Late Income Tax Return Penalties, Accuracy Related Penalties, Late Information Return Penalties, 100% Penalty On Unpaid Withholding Taxes, Penalties For Failure To Provide Foreign Information, Excise Taxes As Penalties, Tax Fraud Penalties, Tax Adviser Penalties, Judicial Appeal of Penalties, Further Reading
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