Owing money to the IRS is never easy. Depending on the size of the bill, change in address or other extenuating circumstances, tax penalties and interest can quickly add up. However, penalties do not always stack up the way one might expect, and there are even options for securing a waiver of penalties.
How penalties and interest accrue
Penalties and interest accrue monthly for unpaid tax bills. Rates may vary, but penalties for filing late are approximately 5% per month, not to exceed 25% of the total amount due. The interest on late payments is 0.5% per month, also up to 25% of the total unpaid amount. It is important to note that these penalties do not apply during years when someone is owed a refund.
Getting a waiver of penalties
Dealing with the IRS is no small feat. That does not mean it is impossible to secure help, though. The IRS is sometimes willing to issue a waiver of penalties for individuals who dropped out of the tax system due to personal problems, including:
- A death in the family
- Loss of financial records
- Serious illness
Whether as a small business or an individual, navigating tax season can be a challenge in even the best of situations. Owing money to the IRS and accruing tax penalties only serves to complicate things, and some people in Georgia might even feel too overwhelmed to know what to do next. This is understandable, and why many people choose to work closely with an attorney who is well versed in tax law and can help them better understand their options.