Is there a cap on interest & penalties for very late tax returns?
I heard that there was a 25% limit of interest & penalties on the total tax due, on a years-late return.
Is this so? Or does the amount owed increase forever (until the return is filed)?
Originally posted 2010-01-21 08:04:09. Republished by Blog Post Promoter
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There is a 25% cap on late filing penalties and 22%-25% cap on late payment penalties, but no cap at all on interest.
Pay if off and stop wondering. . . .tab only gets higher as there is no cap on interest
Penalty/interest for late filing is explained on http://www.irs.gov/taxtopics/tc653.html
However, for income tax returns required to be filed after 2008, the failure-to-file penalty for returns filed more than 60 days after the due date (including extensions) is increased. In this situation, the minimum penalty is the smaller of $135 or 100% of amount owed, whichever is lower.
Penalty limits for tax fraud are listed on http://www.irs.gov/compliance/enforcement/article/0,,id=106790,00.html
I assume you mean federal taxes. No cap on interest. Penalties vary depending on how egregious the violations are. ie. There are penalties for failure to file, another for failure to pay past due taxes ( beond the interest charges), another for falsifying the return, etc.