Taxpayer Penalties

Question 1

What percentage is the late filing penalty and what is the percentage for late payment penalty

Answer 1

Filing - 5% per month up to 25% of unpaid taxes and Payment - 0.5% per month at a 25% cap

Question 2

For individuals, a “substantial understatement” is one that exceeds the greater of

Answer 2

10% of the tax or $5,000

Question 3

For non Subchapter - S Corps, a “substantial understatement” is one that exceeds the lesser of

Answer 3

10% of that tax (or if greater, $10,000) or $10,000,000