In most cases your need to file a tax return of some sort. Failure to File (FTF) penalties are the consequence of not filing. Even if you do not owe a tax, returns need to be filled out completely and filed. Remember, a poorly prepared returns filed on time will land you a penalty.

Some Information returns related to foreign ownership of businesses and not reporting foreign assets can have a staggering $25,000 to start. Here are some of the common FTF penalties we encounter on a daily basis:

Individuals (1040)

Failure-to-file penalty is charged on returns filed after the due date or extended due date, absent a reasonable cause for filing late. The failure-to-file penalty is 5% of the unpaid taxes for each month or part of a month that a tax return is late. The penalty won’t exceed 25% of your unpaid taxes.

If your return was over 60 days late, the minimum failure-to-file penalty is the smaller of $435 (for tax returns with a due date after December 31, 2019) or 100% of the tax required to be shown on the return.

Partnerships and Sub-chapter S corporations

S corporations and partnerships must file their annual tax return on the fifteenth day of the third month following the end of their tax year. If a partnership or S corporation fails to file a tax return, the penalty is $195 per month, per partner, for up to 12 months.

For example, if a partnership files three months late with four partners, the total late-filing penalty the IRS assesses would be (4months x 3 partners x $195) or $2,340. Additional penalties may apply if the partnership fails to furnish Schedule K-1s to its partners.


Late filing of return. A corporation that does not file its tax return by the due date, including extensions, may be penalized part of a month the return is late, up to a maximum of 25% of the unpaid tax. The minimum penalty for a return that is more than 60 days late is the smaller of the tax due or $435 .

These are just a few of the many FTF penalties. Other popular penalties relate to Payroll Tax compliance, 1099 Compliance, 501(c)(3) reporting to name a few.

Written by John M Matras CPA

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