Common penalties include:
- Failure to file: when you don’t file your tax return by the return due date, April 15, or extended due date if an extension to file is requested and approved
- Failure to pay: when you don’t pay the taxes reported on your return in full by the due date, April 15. An extension to file doesn’t extend the time to pay.
- Failure to pay proper estimated tax: when you don’t pay enough taxes due for the year with your quarterly estimated tax payments when required
- Dishonored check: when your bank doesn’t honor your check or other form of payment
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In 2015, 27 million taxpayers were charged tax penalties by the IRS. 98% of those penalties were either failure to file, failure to pay or estimated tax penalties. Only 12% of those penalties were removed (abated). To have a penalty abated, you need to call or write the IRS. You may be able to get a penalty removed simply because you haven’t had any IRS penalties charged in the last three years. This option, known as “first-time abatement” is available for failure to file and failure to pay penalties.
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