Late payment of employment taxes will trigger penalties and interest charges to the taxpayer. These notices, particularly from the IRS, are next to impossible to decipher. Here is a quick primer on how the IRS calculates penalties and interest.
Statute of Limitations
There is NO statute of limitations on the failure to file and report payroll taxes (Social Security, Medicare, Unemployment, withheld income taxes). There also is no statue of limitations on assessment of tax, penalties and interest when a false tax return is filed. Household employment taxes are remitted with the employer’s personal 1040 income tax return. Any household employer who did not pay these taxes has de jure submitted a false tax return.
Types of IRS Penalty Charges
Late Filing Penalties
If you owe tax and don’t file on time, according to IRS regulations, penalties are assessed and added to your bill. Penalties are in addition to BOTH the tax due and the interest on the past due tax. The total late–filing penalty is usually 5% of the tax owed for each month, or part of a month, that your return is late up to five months (25%). If your return is over 60 days late, the minimum penalty for late filing is the smaller of $100 or 100 percent of the tax owed.
Late Payment Penalties
If you file on time but don’t pay all amounts due on time, you’ll generally have to pay a late payment penalty of one–half of one percent (0.5%) of the actual tax owed for each month, or part of a month, that the tax remains unpaid from the due date, until the tax is paid in full. There is no maximum limit to the failure-to-pay penalty.
Authored by: Harold Pena-Hayes, E.A.
President of True Tax Resolutions Inc.
True Tax Resolutions is a company dedicated to providing the highest caliber of tax help services to the business and individual taxpayers of America. Whether your issue is with the IRS or the State we can help you. We help businesses and Individuals file current and past due tax returns. Additionally, we help clients with tax debt settlement, tax debt payment plans, wage garnishment removal, levy lifts, and obtaining hardship status. Go to http://truetaxresolutions.com or call 773–609–4TAX or email email@example.com for a free no obligation consultation with a tax professional. Additional information on this subject can be obtained from www.irs.gov