10% Penalty for Failure to Timely File a Return:
If you do not file your return by the due date and at least 90% of the correct tax is not paid, you owe an additional 10% of the unpaid tax.
5% Penalty for Failure to Timely Pay the Tax Due:
If you file your return on time but do not pay at least 90% of the correct tax due, you owe an additional 5% of the unpaid tax.
You will never be subject to both the 5% and 10% penalties. The penalty will be the applicable 5% or 10%, but not a total of 15%.
If 90% of the correct tax due is paid by the due date, then no penalty is due. To determine if 90% was paid, multiply line 56 of the IA 1040 by 90%. If the result is equal to or less than the amount on line 66 of the IA 1040, plus any payment made with a return filed by the due date, 90% of the tax has been paid timely and no penalty is due.
75% Penalty for fraud or frivolous income tax return filings:
A person who willfully intends to make a false or frivolous tax return to claim a refund, or to evade tax is guilty of fraud. A penalty of 75% of the refund claimed will be due.
$500 Civil Fraud Penalty:
A $500 Civil Penalty is assessed when a return considered to be a “frivolous return.” A return which lacks sufficient information to calculate a tax amount or is substantially incorrect. A return may also be assessed the penalty that reflects a position of law which is frivolous or is intended to delay or impede the administration of the tax laws of this state.
Interest must be added to delinquent tax. Interest is added at a rate of 0.6% per month beginning on the due date of the return (April 30) and accrues each month until paid in full. Part of a month constitutes a whole month, so if you pay the tax on June 3, you are late for May and June for a total interest rate of 1.2% (2 x 0.6%).