The IRS' Failure to File Penalty: What Massachusetts Taxpayers Need to Know

If you failed to file your annual return by Tax Day, you are facing the IRS' failure to file penalty. While you might receive a letter from the IRS informing you that you are being penalized, the failure to file penalty begins immediately once you miss the filing deadline. In this scenario, your options depend on your individual circumstances. Learn more from Boston tax attorney Kevin E. Thorn, Managing Partner of Thorn Law Group.

The Failure to File Penalty Begins Accruing Immediately

As mentioned above, the IRS' failure to file penalty begins accruing immediately. As a result, even if you haven’t received a penalty notice from the IRS, if your return is late, you already owe more than your outstanding tax liability. Interest begins to accrue immediately as well—and it accrues on both unpaid tax and unpaid penalties.

The Failure to File Penalty Can Be Substantial

As the IRS explains, the failure to file penalty is calculated as “5% of the tax due (less any tax paid on time and available credits) for each month or partial month the return is late... up to a maximum of 25%.” However, as the IRS also explains, if a taxpayer’s return “is more than 60 days late, the minimum penalty is the amount listed [which is $510 as of 2025] or 100% of the underpayment, whichever is less.” In other words, the failure to file penalty can be substantial, and acting quickly can help minimize the amount you owe.

You Could Be Facing Other IRS Penalties As Well

If you are facing the IRS' failure to file penalty, you could be facing other IRS penalties as well. These penalties also generally start to accrue immediately.

Your Options Depend on Your Individual Circumstances

As mentioned above, if you are facing the IRS' failure to file penalty, your options depend on your individual circumstances. Generally speaking, potential options in this scenario include (but are not limited to):

• File a delinquent return (and pay all taxes, interest and penalties owed)
• Request an extension (which will mitigate your penalty liability, though interest will continue to accrue)
• Seek penalty relief (if you qualify)
• Dispute the amount of your penalty with the IRS
• Submit a request for an installment agreement or an offer in compromise along with your delinquent return
• Seek a settlement agreement (if you have concerns beyond your delinquent filing)
• Submit a voluntary disclosure (if you have concerns beyond your delinquent filing that could have criminal implications)

While some of these options will protect you against facing an IRS audit, others will not. To ensure that you are making informed decisions based on your specific circumstances, you should consult with an experienced Boston tax attorney as soon as possible.

Request a Confidential Consultation with Boston Tax Attorney Kevin E. Thorn

To request a confidential consultation with Boston tax attorney Kevin E. Thorn, Managing Partner of Thorn Law Group, please call 617-692-2989 or contact us online. We will arrange for you to speak with Mr. Thorn in confidence as soon as possible.