Yes, you will be charged both interest and penalties for filing and paying your taxes late.
Interest:
- Interest is charged on any unpaid tax from the due date of the return until the tax is paid in full. This applies even if you have an extension of time to file. The interest rate is determined under section 6621.
- Interest is also charged on penalties, such as the failure-to-file penalty, the accuracy-related penalty, and the fraud penalty, from the due date of the return (including extensions) to the date of payment. For other penalties, interest starts on the date of notice and demand but is not charged if the penalty is paid within 21 calendar days (or 10 business days if the notice is for $100,000 or more).
Penalties:
- Failure-to-File Penalty: This penalty is 5% of the unpaid taxes for each month or part of a month that the return is late, up to a maximum of 25% of the unpaid taxes. If the return is more than 60 days late, the minimum penalty is the smaller of $450 or 100% of the tax required to be shown on the return.
- Failure-to-Pay Penalty: This penalty is 0.5% of the unpaid taxes for each month or part of a month after the due date that the taxes are not paid, up to a maximum of 25% of the unpaid taxes. If the tax is not paid within 10 days of a notice of intent to levy or a notice and demand for immediate payment, the penalty increases to 1% per month. If an installment agreement is in effect, the penalty is 0.25% per month.
- If both the failure-to-file and failure-to-pay penalties apply in the same month, the combined penalty is 5% (4.5% for late filing and 0.5% for late payment) for each month or part of a month that the return is late, up to 25%.
Exceptions and Reductions:
- Penalties may not be imposed if you can show that the failure to file or pay on time was due to reasonable cause and not willful neglect.
- For individuals with an installment agreement, the failure-to-pay penalty is reduced to 0.25% per month during the period of the agreement.
- Interest and certain penalties may be suspended if the IRS does not provide a notice of liability within 36 months from the later of the date the return is filed or the due date of the return.
In summary, filing and paying your taxes late will result in both interest and penalties unless you can demonstrate reasonable cause for the delay.
Sources:
§ 6651. Failure to file tax return or to pay tax
§ 6601. Interest on underpayment, nonpayment, or extensions of time for payment, of tax
Publication 1380
Publication 1518 (11/2012)
Publication 17 (2023)
Instructions for Form 8928 (09/2016)
