📌 What do you want to know?
📊 The IRS has updated its penalty guidance for 2023, and it’s important for taxpayers to be aware of these changes to avoid unnecessary fines and legal consequences. This blog post aims to provide a comprehensive overview of taxpayer penalties in 2023, helping you stay compliant and up-to-date.
💰 If you don’t pay your taxes on time.
IRS will penalize 0.50% of the balance owed each month. The maximum penalty can be up to 25% of the outstanding balance. This is governed by IRC section 6651(a)(2).
⏰ Late tax filings can be even more costly.
The penalty is 5% of the outstanding balance each month, up to a maximum of 25%. If you are more than 60 days late, the penalty will be lesser than $435 or 100% of the tax due. However, if you have to get a refund, there will be no penalty. This falls under IRC sections 6651(a)(1) and 6651(c)(1).
❗ Misrepresentation of facts
If the IRS determines that your failure to report is fraudulent, the penalty will skyrocket to 15% of the balance owed each month, with a maximum penalty of 75%. This is described in IRC section 6651(f).
👔 Employment tax
Employers should also exercise caution when paying employment taxes on time. Penalties range from 2% to 10% of the underpayment amount, depending on the number of days of late deposit. This is governed by IRC section 6656(b)(1)(A).
📑 Declaration and report of beneficiary information
Failure to file a declaration of information or provide a declaration by a beneficiary can result in penalties ranging from $50 to $290 per disclosure. Annual maximum limits vary by company size and are detailed in IRC sections 6721 and 6722.
⚖️ Exact punishment
The IRS imposes a 20% penalty on underpayments due to negligence or substantial understatement. This is covered in IRC 6662 entry.
🚨 Fraud and tax evasion
Tax fraud and evasion are serious offenses that can result in criminal prosecution. 75% of understatement due to fraud. Penalties can range from heavy fines to imprisonment as outlined in IRC sections 6663, 7201, 7202, and 7206.
🛑 Earned Income Credit (EIC)
If you apply for an EIC and are not eligible, penalties can range from an EIC registration ban from 2 years to 10 years, depending on the nature of the error. This is specified in section 32(k) of the IRC.
🌟 First Penalty Reduction (FTA)
The IRS offers an Initial Penalty Waiver (FTA) program to taxpayers who meet certain criteria. To be eligible, you must have:
- There were no filing requirements or penalties for the previous three tax years.
- You have submitted all currently requested returns or requested renewals.
🤝 What can our company do for you? Our company specializes in helping clients comply with taxes and reduce penalties. We are happy to help you work through the complexities of first-time relief and ensure that you meet all the necessary criteria for relief.
🔍 Understanding IRS penalties in 2023 is important for both individual and business taxpayers.
Failure to comply with these rules can lead to serious financial and legal consequences. Always consult a tax professional to ensure that you meet all of your tax obligations.
