Tax Penalties

Question 1

Negligence

Answer 1

Deficiency of tax liability (no intent to defraud)
20% of deficiency

Question 2

Fraud

Answer 2

(intentional)
75% of deficiency

Question 3

Frivolous Return

Answer 3

$5,000

Question 4

Failure to File

Answer 4

5% of unpaid taxes for each month (partial too) up to a max of 25%
Minimum $510 for a return later than 60 days

Question 5

Failure to Pay

Answer 5

0.5% per month up to a max of 25%

Question 6

Understatement of liability

Answer 6

Based on:
1. Amount of underpayment
2. Period when the underpayment was due and underpaid
3. Interest rate for underpayments that we publish quarterly

Question 7

Failure to furnish a copy to the taxpayer

Answer 7

$60

Question 8

Failure to sign return

Answer 8

$60

Question 9

Failure to furnish identifying number

Answer 9

Preparer tax identifying number (PTIN)
$60

Question 10

Failure to retain copy or list

Answer 10

$60

Question 11

Failure to file correct information returns

Answer 11

$60

Question 12

Failure to be diligent in determining eligibility for certain tax benefits

Answer 12

Applicable credits:
1. Any dependent credit (Additional Child Tax Credit/Child Tax Credit)
2. American Opportunity Credit
3. Earned Income Tax Credit
4. Lifetime Learning Credit
$600

Question 13

Interaction of Failure to File and Failure to Pay

Answer 13

Failure to File is reduced by the amount of the failure to pay penalty for that month (5% total)