Internal Revenue Tax Audit, IRS Audits

Being audited by the IRS is very stressful. One of the best methods of combating a bad situation is to be educated and informed. You should know what the infractions and penalties are that you could get hit with.

If you get a late filing infraction, your tax penalty could result in 5% per month of the net tax due to the IRS with a maximum of 25%. If you IRS tax return is more than 60 days late, the minimum IRS tax penalty is the smaller of $100 or 100% of the tax owed. If the late filing is due to fraud, you will get a tax penalty of 15% per month of the net tax due to the IRS with a maximum of 75%.

If you make late tax payments to the IRS, your penalty could be 0.5% per month of the unpaid tax due to the IRS with a maximum of 25%. This amount increases to 1% after the IRS issues an IRS tax notice of their intent to levy.

For negligence or disregard of IRS tax rules and regulations you could get a penalty of 20% of tax underpayment that would otherwise be due to the IRS. If you were being fraudulent then the penalty would increase to 75% of the tax underpayment that would be due to the IRS. If you substantially understate your income, which is greater than 10% of the correct tax liability or $5,000, then your penalty could be 20% of the tax underpayment due to the IRS.

If your infraction was overvaluating by 200% or more but less than 400% of the correct amount then your penalty could be 20% of the tax underpayment due to the IRS. Over Valuations of more than 400% would be subject to a penalty of 40% of the tax underpayment that would be due to the IRS.

If your infraction deals with Estate and gift tax under valuation or 50% or more of the correct valuation and if the tax underpayment exceeds $5,000 then 20% of the tax underpayment would be due to the IRS. If the same is true but the under valuation is 75% or more and the tax underpayment exceeds $5,000 then the tax underpayment penalty due to the IRS becomes 40%. I hope this helps you to determine what penalties could result from your IRS audit.