1. THE failure-to-file penalty is generally more than the failure-to-pay penalty. If you cannot pay all the taxes you owe, file to prevent that more costly failure-to-file penalty.
2. The failure-to-file penalty is 5 percent per month of the unpaid taxes. This penalty will not exceed 25 percent of the taxpayer’s unpaid taxes.
3. The failure-to-pay penalty is only ½ percent per month, not to exceed 25 percent.. Compared to the failure-to-file penalty, this is small. You really should file on time.
4. If you file your return more than 60 days after the due date or extended due date, the minimum penalty is the smaller of $135 or 100 percent of the unpaid tax.
5. You will not have to pay a failure-to-file penalty if you can show that you failed to file on time because of reasonable cause and not because of willful neglect.
6. If you filed an extension and you paid at least 90 percent of your actual tax liability by the due date, you will not be faced with a failure-to-pay penalty.
7. If both the failure-to-file penalty and the failure-to-pay penalty apply in any month, the 5 percent failure-to-file penalty is reduced by the failure-to-pay penalty, meaning the maximum combined penalty tops at 5 percent.
8. In summary, if you can’t pay, file. Reduce your penalties by filing on time and saving the bigger late filing penalty.
9. Request a payment plan. Use form 9465.
10. IRS may ask you to provide financial information (Form 433-A for individuals or Form 433-B for businesses) if you owe over a certain amount or if you have some issues such as delinquencies in paying or filing.
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Sy Al-os Accountancy Corporation provides accounting and tax services to individuals, corporations, LLCs and business entities. The Firm has a niche in defending taxpayers audited by the IRS and other governmental agencies. The firm celebrates its 38th anniversary in 2015.
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Victor Santos Sy graduated Cum Laude from UE with a BBA and from Indiana State University with an MBA. Vic worked with SyCip, Gorres, Velayo (SGV – Andersen Consulting) and Ernst & Young before establishing Sy Accountancy Corporation in 704 Mira Monte Place, Pasadena, CA 91101. He has 50 years of experience in accounting, consulting, and tax work.
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The Firm proudly welcomes Arlene Al-os in 2015. She obtained her bachelors of Science in Accountancy from Mindanao State University and MBA from Ateneo de Manila University. She teaches intermediate accounting at UCLA and was a professor of Economics at Asia Pacific College. She has over 15 years of experience including member firms of KPMG and BDO Seidman accounting firms.
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Our readers may call (626) 744-0200 or email tax questions to [email protected]. Please visit our website for about 300 tax tips at www.victorsycpa.com.
