Penalty and Interest
Taxpayers who fail to file a return or fail to pay taxes are subject to penalties and/or interest.
- Penalty applied for “Failure to File” a return by the due date:
- 5% of tax due per month, or part of a month, not to exceed 25%
- Penalty applied for “Failure to Pay” tax due:
- ½% per month (or portion of month) up to maximum of 25%
Waiver of Penalty
Taxpayer can request a waiver of penalty (only).
- Request must be in writing
- State reasons for waiver or reduction
DOR will review based on guidelines and response back to the Taxpayer in written form whether the waiver was granted or denied.
Interest is charged on a return which has a balance due and which has not been paid in full by the due date. State law says that if any tax is not paid when due, interest is due on the unpaid portion from the time the tax was due until it is paid entirety.
The law also says that interest on underpayments and overpayments is established by DOR in the same manner, and at the same time, as the underpayment rate provided in Internal Revenue Code Sections 6621 and 6622. This means that interest rates may change or can change quarterly.