IRS Penalties: How to Avoid or Reduce Late Filing Fees

Owed an IRS Penalty? Here’s What You Need to Know.

If you’ve received a penalty notice from the IRS, don’t rush to pay—it may be possible to reduce or eliminate it. Even if you’ve already paid, you might qualify for a refund.

Tax laws impose significant penalties for late filings and unpaid taxes, which can quickly add up. If your business operates as an S corporation or partnership, today’s filing deadline is crucial. If you haven’t submitted your return or filed an extension, you need to act fast.

Understanding IRS Late Fees and Penalties

Failing to file or pay taxes on time can result in severe financial consequences:

• Individuals & C Corporations: A 5% penalty per month on the unpaid tax, up to 25% of the total amount due. If your return is more than 60 days late, the minimum penalty is $485 or 100% of the tax owed, whichever is less.
• Partnerships & S Corporations: A fine of $240 per partner or shareholder for each month the return is late, for up to 12 months.

Additionally, if you don’t pay your taxes on time, you’ll incur a late payment penalty—0.5% of the unpaid tax per month, up to 25% of the total tax owed.

How to Request IRS Penalty Relief

There are several ways to request a reduction or elimination of penalties:

1. First-Time Abatement – If you have a good compliance history, the IRS may waive your penalty.
2. Special Relief for Partnerships & S Corporations – Some businesses qualify for penalty waivers under certain circumstances.
3. Reasonable Cause Appeal – If you have a valid reason for filing or paying late (such as illness, natural disasters, or unforeseen financial hardship), you can request relief.

If the first two options don’t apply, a reasonable cause request may still help you get penalties removed.

Protect Your Finances – Take Action Now

Paying unnecessary penalties is avoidable. Whether you need help filing, requesting penalty relief, or planning smarter tax strategies, Smolin & Co CPA is here to guide you.

📅 Schedule a consultation today!
📞 (916) 800-5600
🌐 www.smolincpa.com

Yana Smolin, CPA