What penalties may be incurred for late filing of a tax return?

When a taxpayer files their tax return late, they may incur both failure to file penalties and failure to pay penalties. The failure to file penalty is assessed because there is an obligation to submit the tax return by the due date. This penalty is based on the amount of tax due on the return and accrues over time, escalating the longer the return is delayed.

In addition to this, if taxes owed are not paid by the due date, a failure to pay penalty is also applicable. This penalty is charged on any unpaid taxes from the original due date of the return and continues to accrue until the balance is paid in full. Therefore, if a taxpayer is late in filing and has taxes owed, they will face penalties for both aspects: the act of failing to file promptly and the failure to pay the owed tax by the deadline.

This dual penalty system is designed to encourage timely compliance with tax obligations, stressing the importance of meeting both the filing and payment deadlines to avoid additional financial repercussions.