No one likes paying taxes, but it is the unpleasant task every working person must do. Neglecting to pay your taxes by the due date can make things even more unpleasant. The State of North Carolina has established a number of penalties to be imposed on the taxpayers for not filing state taxes on time.
What is the first penalty encountered if a taxpayer misses the April 15th deadline?
The penalty for late payment is 10% of the tax shown due. In addition, there is a late filing fee penalty of 5% of the unpaid tax. This late filing penalty is added for each month your tax return is late (this fee cannot exceed 25% of the taxes owed). Interest is also due on the unpaid or underpaid amounts (this is calculated on Form D-422). Please note: there are some exceptions if partial payment of the taxes has been made.
What if the IRS changes my Federal Income Tax Return resulting in me owing more taxes?
If the IRS changes your federal return, you have 6 months to amend your State return after the date you were notified of the change. If you fail to report the IRS change there is a 5% penalty for each month the federal change is not reported. The penalty cannot exceed 25% of your additional tax.
What if my check to North Carolina Department of Revenue bounces?
If you write a bad check to the Revenue Department, you will be charged a bad check penalty of 10% of the check amount that was returned for insufficient funds. The bad check penalty cannot exceed $1,000.
What other penalties can the State of North Carolina impose?
If you report exaggerated deductions or other financial information for the sole purpose of reducing your taxes you will be subject to a negligence penalty of 10% or 25%. If the IRS changes your federal tax return based on this information, the North Carolina penalty will be imposed.
In the case of fraud with the intent to evade paying the tax, you will be assessed a fraud penalty of 50% of your unpaid tax.
A $500.00 penalty may be assessed if it is discovered that a frivolous return has been filed. A frivolous return is a return that has incomplete information to calculate the tax owed and this was intentionally done to delay or impede the process of paying the owed tax.
Neglecting to pay your taxes is serious business. If you are having trouble paying your taxes, don’t ignore those letters – get help. More and more penalties can be imposed the longer you delay.
For help with your tax problems, contact Brad Ritter, CPA at 919-780-7350.