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What Are the Most Common Tax Penalties?

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Remember, no one is perfect and everyone makes mistakes. With that being said, the IRS enforces certain penalties that range from as minor as a fine to serving time in prison. Most of these penalties result from things as simple as overlooking a few numbers.

One of the most common tax penalties are fines for not filing your taxes on time. Another related and common penalty is negligence and disregard for the rules and regulations. Examples of negligence are failure to make a reasonable attempt to comply with the internal revenue laws and keep adequate books and records or to substantiate items properly, just to name a few. There is also a bounced check penalty which results from a check that doesn’t clear for the full payment for the IRS. In this penalty, if the check amount is $1,250 or less the penalty is the amount of the check or $25, whichever one is less. If the check is more than $1,250 the penalty will be 2 percent of the amount of the check. A civil fraud penalty occurs when there is any underpayment of tax on your return because of fraud; 75 percent of the payment due will be added to your tax.

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