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Common Tax Penalities

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The information below pertains to both business and personal taxes. It is subject to change by taxing authorities without notice and, as such, may be out of date and should only be used to ESTIMATE penalties.

IRS Guidelines

  • On Time: Returns are considered to be filed on time and are accepted without penalty if they are properly postmarked and addressed no later than their due date.
  • Extensions: Returns can be extended by filing Form 4868 AND paying 90% of your prior year’s total tax liability by the return’s original due date; e.g. if your total tax was $1,000 in the prior year, you must file Form 4868 and pay at least $900 by the current years due date to avoid penalty.
  • Failure to File: A return filed after the due date and without extension is subject to a Failure to File (FTF) penalty of 5% of the unpaid tax PER MONTH up to 25% of the outstanding liability. Returns more than 60 days late are subject to a minimum FTF penalty of $205 or 100% of the outstanding liability, whichever is less.
  • Failure to Pay: Timely filed returns not paid in full by their due date are penalized at a rate of 0.5% of the outstanding liability per month up to 25% of the unpaid tax.
  • Interest: Interest is charged on unpaid tax at a rate of 3.96% and compounds daily.
  • More information can be found on the IRS Website here.

MI Guidelines

  • On Time: Returns are considered to be filed on time and are accepted without penalty if they are properly postmarked and addressed no later than their due date.
  • Extensions: State returns can be extended by filing MI Form 4 AND paying your total tax liability by the return’s original due date.
  • Failure to File: A return filed after the due date and without extension is subject to a Failure to File (FTF) penalty of 5% of the unpaid tax for the first 60 days late and 5% each month thereafter up to 25% of the outstanding liability.
  • Failure to Pay: Timely filed returns not paid in full by their due date are penalized at a rate of 5% of the unpaid tax for the first 60 days late and 5% each month thereafter up to 25% of the outstanding liability.
  • Interest: Interest is charged on unpaid tax at a rate of 4.75%.
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