Mar 1, 2016 | Federal Tax Developments, Uncategorized

On February 24, 2016, President Obama signed a new law banning income taxes on Internet Services.  This law also included a provision increasing the penalty for failing to file a tax return.


The higher failure-to-pay penalty is effective for returns to be filed after calendar year 2015, so it applies to this tax return season.  The penalty is equal to 5 percent of the amount of additional taxes owed for every month that your return is late, up to a maximum of 25 percent.


Remember there are 2 penalties:  A failure-to-file penalty AND a failure-to-pay penalty.   If you have a balance owing it is always better to file the returns timely and pay when you can or set up an Installment Agreement Payment Plan with the IRS.  You can also pay your tax balance by credit card.


Filing an extension ONLY delays filing the return.  If you owe tax, the tax must be paid by April 15 to avoid a failure-to-pay penalty.


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