Failure-to-File Penalty

Failure-to-File Penalty

The Failure-to-File Penalty is a financial penalty imposed by the Internal Revenue Service (IRS) on taxpayers who do not file their federal income tax returns by the due date, including any extended filing date.

The penalty typically amounts to 5% of the unpaid tax for each month or part of a month that the return is late, up to a maximum of 25%. If the taxpayer owes no tax, the penalty is generally not assessed. However, if a return is filed more than 60 days late, the minimum penalty is the lesser of $435 or 100% of the unpaid tax.

For example, if a taxpayer owes $1,000 in taxes and files their return three months late, the penalty would total $150 (5% per month for three months). If the return was filed 70 days late, the minimum penalty of $435 would apply instead, assuming the taxpayer owed tax.