When a person fails to file his tax returns, doesn’t meet his deadline, or even fail to pay his back taxes, he comes under the IRS scanner and he is liable to pay penalties.

The IRS is known for flagging the wrong people at times. At such times, things can be resolved with the help from a tax expert.

The IRS penalties and the interest are calculated based on the amount the person owes to the IRS. The IRS levies penalties for different reasons and the amount depends on magnitude of the issue. There are basically five categories on which the penalties are charged. They are as follows:

• Fraud penalty
• Accuracy
• Combined Penalty
• Failure to Pay Taxes
• Late Returns

The most severe of the penalties is the fraud penalty. The IRS goes to the extent of levying almost 75% penalty to the total amount under reported and additional interests.

If the tax payer fails to file his return, he incurs this penalty, he is penalized 5% for every month he fails to file his returns. This percentage may go as high as 25%. The percentage is of the total tax that is due. The failure to pay penalty is when the tax payer fails to pay the tax amount that is due. This is calculated as a percentage of the actual amount he owes. The percentage is 0.5% for each month he fails to pay the tax amount.

The tax payer can reduce his penalty and interests by abatement. When a person files for an abatement and gets it approved by the IRS, a major portion of the IRS penalties are waived and the person need to pay only most of the tax amount he owes.

IRS penalties sometimes make up to 50% of the tax amount!

This site is dedicated to providing you an insight into various methods of IRS tax settlement. However, keep in mind that the material provided here is for informational purposes only. Always consult a tax professional for any tax-related matters.