What are the penalties for not paying income taxes?
Interest, compounded daily, is charged on any unpaid tax from the due date of the return until the date of payment. The interest rate is the federal short-term rate plus 3 percent. That rate is determined every three months. In addition, if you filed on time but didn’t pay on time, you’ll generally have to pay a late payment penalty of 0.5% of the tax owed for each month, or part of a month, that the tax remains unpaid after the due date, not exceeding 25 percent. However, you will not have to pay the penalty if you can show reasonable cause for the failure. The 0.5% rate increases to 1% if the tax remains unpaid after several bills have been sent to you and the IRS issues a notice of intent to levy. Beginning January 1, 2000, if you filed a timely return and are paying your tax pursuant to an installment agreement, the penalty is 0.25% for each month, or part of a month, that the installment agreement is in effect. If you did not file on time and owe tax, you may owe an additional pen
