• Penalties for late payments can extend beyond the amount of tax owed.tax forms image by Chad McDermott from Fotolia.com
  
  When it comes to late payments to the Internal Revenue Service (IRS), penalties for late payments can become cumulative and significant. Penalties can be assessed in additional categories in addition to the amount of taxes owed. The IRS can start assessments beginning on the very first day of a late payment and continue until the tax is fully paid.
  
  

Late Filing Payment Penalties

• The penalty for non-payment of taxes when you file your taxes late can be severe and cumulative. The IRS can assess a late payment fee of five percent of the amount of taxes owed for up to five months. Additionally, if you are more than 60 days late in filing your taxes and owe money to the IRS, they can assess a minimum penalty that can range from $100-$135, or up to 100 percent of the taxes owed.
  
  

Failure to Pay Penalty

• If you do not pay taxes on time, the IRS can also assess a failure to pay penalty. This penalty will be 0.5% for each month that the tax is not paid in full. The important thing to consider in this incidence is that there is no maximum limit on the amount or continuation of failure-to-pay penalties. The penalty will continue to grow and accrue until the tax debt is totally satisfied.
  
  

Interest

• Interest rates are calculated based on the amount of unpaid taxes and penalties assessed. The IRS sets quarterly, variable interest rates for unpaid taxes. Interest is also assessed on penalties. As you can see, the results can be cumulative and significant. However, the IRS sets a 25% maximum on interest on unpaid taxes, penalties and corresponding interest assessments.
  
  

Failure to File Penalties

• If you owe taxes and failed to file tax returns the IRS can also assess penalties for “failure to file.” The failure to file penalties can be in addition to other penalties and interest due. The failure to file penalty is calculated based on the due date of the tax return. The IRS can assess a penalty of five percent for each month that the return was late, up to a maximum failure to file penalty of twenty-five percent of the taxes owed.
  
  

Abatements and Offer in Compromise

• The IRS understands that certain circumstances can apply that prevent timely payment of taxes. This is sometimes the case for members of the military who have to relocate and report for duty in other countries. The IRS provides all taxpayers with the opportunity to discuss hardship circumstances and to negotiate payment arrangements or to submit what is referred to as an “Offer In Compromise” on delinquent tax payments. It is best to consult with a tax attorney or to fully explore IRS policies and procedures to apply for abatement, negotiate tax payments or submit an Offer In Compromise. IRS information is included under the Resources Section at the close of this article.