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Civil penalties for tax errors are steep

This blog has on previous occasions talked about how White Plains, New York, residents and those in the surrounding area who are not careful about filing and paying their federal taxes can wind up accused of serious crimes.

Indeed, in addition to having to deal with a criminal conviction on one's permanent record, tax fraud and tax evasion charges can land a New York resident in prison for years. Steep fines and restitution orders are also possible.

However, it is important not to lose sight of the fact that the IRS also imposes significant monetary penalties in civil matters, that is, those in which no criminal charges get filed.

For example, simply failing to file one's tax return, or filing late without getting an extension, can result in a penalty of 5% on the tax that would have been owed had a return been timely filed. Likewise, failures to pay in a timely fashion subject a taxpayer to both penalties and interest. These penalties apply without regard to fault, although a taxpayer may be able to persuade the IRS that he had extenuating circumstances.

Moreover, in cases where the IRS decides that a taxpayer acted carelessly or dodged rules and laws that applied to his situation, it may also impose an additional 20% penalty on that part of the taxpayer's obligation that he negligently failed to pay. This penalty may apply in other situations as well.

The IRS does not have to prove that the taxpayer set out to cheat the system before imposing this penalty. In fact, once the IRS establishes that there were some grounds to impose the penalty, it is up to the taxpayer to prove she should not have to pay it.

Whether a taxpayer deserves to pay a hefty penalty is frequently the subject of civil tax litigation, and these sorts of cases can be hard for a taxpayer to win for a number of reasons. Having the help of an experienced attorney is often a good idea in these sorts of cases.

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White Plains Office
81 Main Street
Suite 307
White Plains, New York 10601

Phone: 914-686-7171
Fax: 914-686-0168
White Plains Law Office Map

East Hampton Office
17 Beverly Road
Post Office Box 2888
East Hampton, New York 11937

Phone: 631-329-7171
Fax: 631-604-6140
East Hampton Law Office Map

Chappaqua Office
726 King Street
Post Office Box 488
Chappaqua, New York 10514

Phone: 914-238-7171
Fax: 914-238-4353
Chappaqua Law Office Map

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