How Much is the IRS "Failure to File" Penalty?

If you are behind on filing your federal tax returns, you are facing the IRS’ “failure to file” penalty. This penalty begins to accrue immediately, and it continues to accrue for up to five months (subject to the minimum penalty amounts discussed below). Learn about how the IRS calculates the failure to file penalty (and what you can do if you are facing this penalty) from New Jersey tax attorney Kevin E. Thorn, Managing Partner of Thorn Law Group.

How the IRS Calculates the Failure to File Penalty

For most taxpayers, the failure to file penalty is calculated as five percent of the tax due, “for each month or partial month the return is late.” The failure to file penalty continues to accrue on a monthly basis until it reaches 25 percent of the tax due, which is the maximum penalty amount. Crucially, however, delinquent taxpayers also accrue interest, and this interest can continue to accrue indefinitely on the total amount a taxpayer owes (for both taxes and penalties).

For low-income taxpayers, the IRS also imposes a minimum failure to file penalty, which is $510 (as of 2025) or 100 percent of the underpayment, whichever is less.

In some cases, taxpayers who are facing the IRS’s failure to file penalty can face other penalties as well. While the IRS’ “failure to pay” penalty is included in the failure to file penalty when taxpayers are behind on their filings, other penalties are not.

What Are Your Options if You Are Facing the IRS’ Failure to File Penalty?

If you are facing the IRS’ failure to file penalty (and perhaps other tax-related penalties as well), what options do you have? While taxpayers may simply have to pay what they owe in some cases, there are potentially a variety of other options available. Recognizing that individual taxpayers’ circumstances vary, some potential options in this scenario include:

• Disputing the IRS’ calculation of your penalty (or penalties)
• Seeking penalty relief based on “good cause” or another qualifying explanation for your delinquency
• Seeking an installment agreement or submitting an offer in compromise
• Seeking to settle your total tax debt (including interest and penalties) with the IRS
• Submitting a voluntary disclosure

Some of these options can provide more relief than others. However, some of these options can be riskier than others as well, and not all of these options are available to all taxpayers. With this in mind, if you are facing the IRS’ failure to file penalty and are interested in pursuing an option to mitigate your liability, we strongly recommend consulting with an experienced New Jersey tax attorney before moving forward.

Discuss Your Options with New Jersey Tax Attorney Kevin E. Thorn

If you are interested in learning more about the options that you may have to mitigate your liability to the IRS, we invite you to get in touch. To discuss your options with New Jersey tax attorney Kevin E. Thorn, Managing Partner of Thorn Law Group, please call 201-842-7696 or request an appointment online today.