Tax Penalty Relief
Maryland Tax Lawyer – Tax Penalty Relief
More than 140 types of civil tax penalties are set forth in the U.S. Internal Revenue Code. Depending upon the particular facts and circumstances of a taxpayer’s actions, these penalties can be severe – the IRS can impose hefty monetary fines and in some cases even require the forfeiture of a taxpayer’s property. In most situations, the civil penalties are tied to the amount of unpaid taxes and increase during the period of nonpayment. Taxpayers who act intentionally and illegally to avoid paying taxes also run the risk of facing federal criminal prosecution for tax evasion.
Common Tax Penalties
Under federal tax law, businesses and individual taxpayers can be assessed substantial fines and penalties when they fail to comply with IRS requirements. These fines and penalties apply to income taxes, estate and gift taxes, withholding and employment taxes and excise taxes. Some of the most common tax penalties include:
Failure to File a Return Penalty. When a taxpayer fails to file a return by the due the due date, the taxpayer will be subject a failure-to-file penalty. The failure-to-file penalty assessed by the IRS is normally 5% per month on the total amount of taxes due up to a maximum of 25%.
Failure to Pay Taxes/Underpayment Tax Penalty. When a taxpayer fails to pay taxes on time or underpays the amount due, the taxpayer will face a failure-to-pay penalty. The penalty for failing to pay will generally be 1/2 of 1% of the unpaid taxes owed up to a maximum of 25% of the unpaid tax. This penalty applies to each month after the due date and starts to accrue the day after the tax-filing deadline.
Accuracy-Related Tax Penalty. The accuracy-related tax penalty applies when a taxpayer fails to properly report a tax liability. The accuracy-related penalty is generally 20% of the total understatement of tax but in certain cases it can be as high as 40%.
Tax Fraud Penalty. The IRS has the power to impose harsh civil penalties when taxpayers try to commit tax fraud. In cases involving fraud, the civil fraud penalty can be as high as 75% of the total tax due.
Trust Fund Recovery Penalty. When a business has employees, the business must withhold and pay trust fund taxes (payroll taxes) including income tax, Social Security, Medicare and unemployment taxes. When a business fails to pay trust fund taxes, the IRS can assess a trust fund recovery penalty against any individual taxpayer who was responsible for and willfully failed to collect or pay the payroll taxes.
Penalties Involving Undisclosed Offshore Accounts and Assets. Taxpayers who fail to properly disclose their offshore bank accounts can be subject to severe penalties. The IRS Offshore Voluntary Disclosure Programs offer reduced civil penalties for taxpayers who voluntarily come forward to report their previously undisclosed offshore accounts.
Thorn Law Group – Pursuing Tax Relief
Thorn Law Group is committed to helping taxpayers resolve tax payment disputes and controversies with the IRS. Our experienced team of tax law attorneys will work to lessen or eliminate the penalties you are facing. If you are in need of tax penalty relief, contact a Maryland tax lawyer at our firm at (240) 235-5096 or email ket@thornlawgroup.com
