Now that the April 15th filing deadline has passed, most people have either filed their taxes or filed for an extension with the IRS. If you happen to be part of the group that has not, the sooner that you take care of filing the better. If you do not owe, the IRS can be very forgiving, however if you owe taxes and have failed to file, the penalties can quickly become quite steep. The longer you procrastinate, the greater your penalty will be. The IRS charges a combined late filing and late payment penalty of 5% for each month that the return is late, up to 25% of the net amount due. If your taxes remain unpaid after five months, the 0.5% per month failure to pay penalty will still continue to accrue up to 25%. This leads to a total failure to file and failure to pay penalty of up to 47.5% of the tax dollars owed.
Even if the net amount of your taxes is relatively low, if your return is over 60 days late the IRS imposes a minimum failure to file penalty of $135. Also important to note is that if the IRS has made several collection attempts and has issued an intent to levy, the 0.5% late payment penalty will be increased to 1%.