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.
If you have additional questions about this post or any other, please contact us directly at 928-778-0079.
Schutte & Hilgendorf is a leading Prescott CPA firm, offering superior client service to individuals, small businesses, non-profit organizations, and homeowners associations.
Our services include accounting, bookkeeping, audit, review, tax return preparation, tax planning, payroll and QuickBooks consulting. We are located in Prescott and serve all of Yavapai County, and Northern Arizona.
