question for a tax professional

traffic1234 · #1 02-11-2007, 04:53 AM

i heard that the maximum penalty for underpaying(assuming you dont get prison time of course) is twice what you owe. is this true?

suzy89222 · #2 02-12-2007, 02:49 AM

ive heard something like that too. but i think it's only double max if they determine it was an honest mistake, not fraud, but i have no idea. anyone know?

tourney guy · #3 02-12-2007, 03:29 AM

NO - You owe interest on what you were supposed to pay.

That is what ruins most people's lives!!!!!

Howard Beale · #4 02-12-2007, 05:40 AM

link

traffic1234 · #5 02-13-2007, 02:35 AM

thanks for the info, but i meant if you got audited, not if you back paid. if you got audited, and you underpaid, is the MAX penalty (besides prison), twice what you owed? thanks.

Easy17 · #6 02-13-2007, 11:21 AM

there are three things you must pay the IRS in the worst case:

1) The tax you owe every year

2) Penalties (these are specific %)

3) Interest (at the fed short term rate +3%)

As far as 'maximum' goes, #'s 1 and 2 above are specific, limited amounts. Only # 3, interest, has no set limit.

In the case of being audited and underpayment, the general penalty for underpayment is 20%-40% of the tax owed. The worst penalty is assessed for filing a fraudulent return, which is 75% of the tax owed.

nineinchal · #7 02-13-2007, 01:54 PM

You wouldn't have that question if you used the accounting firm of Dewey, Cheatham and Howe, LLP.