Penalties

If an individual fails to pay any tax by the applicable due date, the individual will owe a late payment penalty. The late payment penalty is the greater of five dollars or 5% of the unpaid tax, plus an additional 0.5% for each month the tax remains unpaid, not to exceed a total of 12%. However, the penalty is waived if all of the following conditions are met:

the taxpayer has paid at least 90% of the tax due by the original due date, not including any extensions;

the taxpayer files a return by the extended due date; and

the taxpayer pays any tax balance reported on the return at the time of filing.

In addition to the late payment penalty, statute authorizes a number of other penalties for:

failure to pay a notice and demand for payment (collection penalty);

fraudulent or willful failure to file;

filing a fraudulent, frivolous, or willfully false return;

fraudulent failure to pay tax when due or willful attempt to evade tax;

negligence or disregard for laws, rules, or regulations, without intent to defraud; and

a tax preparer’s penalty for willful or reckless disregard for applicable laws or rules.