The American tax system is one of a voluntary assessment and pay as you go. It relies on the taxpayers’ honesty and integrity. For the violators of this trust, the IRS has designed a penalty system. The penalties are pretty stiff.
There are over 140 penalties that the IRS core authorizes. The most common ones are:
- Failure to file on time
- Failure to pay on time
- Failure to deposit with the financial institution & instead mailed
- Civil penalties: due to failure to file W-2
- Trust fund 100% when business entity fails to remit employee withholding to IRS. Assessed against responsible officer of the business entity.
- Under estimating tax liabilities
These penalties are automatically tacked onto the taxes due when the returns are filed. The snowballing effect of these penalties and interest on small balance dues can quickly escalate and the amount due can double in less than four years. Interest and penalties compound monthly. The IRS code has provisions for abatement of the penalties and in very special circumstances the interest. For this it must be shown that “due diligence” was exercised, there was no “malicious intent to defraud” and finally “no negligence” on the part of the taxpayer.
Contact us for more information or call us in our Doral, FL office at Call 305-500-9361 today!