Miranda Chook, CPA discusses IRS penalties and interest.

Late Filing Penalty

If a person is late on their tax return, the IRS will levy penalties and interest, and the penalty for failure to file is 5 percent per month on the amount owed, to a maximum of 25 percent.

Late Payment Penalty

If a person is late on their tax payments, the IRS will levy penalties and interest, and the penalty for failure to pay ranges from 1/2 of 1% per month on the amount owed, to a maximum of 25 percent.

Penalty Abatement or Penalty Relief

Taxpayers can often obtain penalty relief where reasonable cause may exist. Common examples include the loss of tax records, illness or death in the family.