Penalties

No matter how large your debt is or how much you try to ignore it, there is no escaping the penalties that accrue. The longer your debt is unpaid, the more penalties will add up. This means, that on top of what you owe in taxes, you will be responsible for a larger amount of interest, in addition to late fees, or penalties. In 2003 alone, the IRS issued 18 billion dollars in penalties for unpaid debt in the form of back taxes!

According to the IRS, if you do not file a tax return by the due date, you will be penalized for each month it is late. These penalties can accumulate for up to five months. You will be paying five percent penalty per month of the debt you owe.

When it comes to actually paying off tax debt, you are also looking to face some penalties if the debt isn't paid in full. Each month that the debt isn't paid off, you will be charged a half of a percent in penalties. In other words, a $10,000 debt will cost you $50 per month in penalties until the balance is paid off in full.

There are many other laws that apply to penalties, and the jargon used by the IRS to explain these laws can be very confusing. Failure to file a tax return or to pay penalties can set you back tremendously. A debt that seems manageable can turn into something impossible.

If you are in a situation where you owe both tax debt and penalties, make sure to consult with a professional before trying to settle the debt on your own. Penalty Abatement is a service that professionals can assist you with, something that requires understanding of the penalty procedure. Urgent Tax Care can help you develop a strong case for penalty abatement. The goal is to have all penalties removed or refunded. Our tax attorneys and enrolled agents are very familiar with penalty abatement cases.

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