What is the IRS failure-to-file penalty?
The failure-to-file penalty is 5% of unpaid tax for each month or part of a month your return is late, up to a maximum of 25%. When both the failure-to-file and failure-to-pay penalties apply in the same month, the failure-to-file penalty is reduced to 4.5% so the combined rate is 5%.
What is the failure-to-pay penalty?
The failure-to-pay penalty is 0.5% of unpaid tax per month, up to 25%. It applies whether or not you filed, as long as tax remains unpaid after the deadline. Setting up an installment agreement can reduce the monthly rate to 0.25%.
Is there a minimum penalty for filing very late?
Yes. If you file more than 60 days after the deadline, the minimum failure-to-file penalty is the lesser of a set dollar amount (recently $485) or 100% of the tax required to be shown on the return. This applies even to small balances.
Does the IRS charge interest too?
Yes. Interest accrues on unpaid tax and on penalties from the due date until paid in full, compounded daily. The rate is the federal short-term rate plus 3%, adjusted quarterly, and has recently been around 8% per year.