Tax question, perhaps you know?

Question

Ok, I owed $200 on my taxes for 2005. I didn't turn in my payment, and it's almost been a year to date. Does anyone know what the interest rate is? Is it 6%? Per month, per week, per day?

Would like an answer. . .and yes I know, a foolish thing for me to do. But I'm trying to resolve it. . .

FYI. . .

I have received NO calls or letters at all from the government. That's what's so surprising! I didn't file though for 2005 (yes, I should have). . . .What's the interest rate though, and is it per month?

Answer 1

If you did not file a return, how do you know what you owed?

If you have a copy that you have all done and that's why you know what you owe, send it in with $200 ASAP and they will bill you for the interest and penalties. The penalties are worse than the interest. The clock is ticking, send it in now!

Answer 2

File your return as soon as possible. Some of the penalties will stop accumulating when you do, although there will be interest and probably some penalties until it's all paid off. Penalties can be a lot more than the interest - interest right now is 8% per year. There is information on penalties on page 19 of IRS Publication 17 - you can download it at irs.gov

If you don't file, sometime (probably in 2007) you'll get a letter from the IRS telling you that they have a W-2 for you that was not filed on a tax return. They'll assess tax, penalties and interest.

Answer 3

The interest rate can vary quarterly. It is charged from the due date of the return until payment is made in full. The current rate is 8% per annum.

However, a key point is that you have not yet filed a return for 2005. That's why you are not getting letters from the IRS yet. If you have a debt from 2005, you MUST file the return first. There will be penalties and interest due with the return, both for late filing and late payment of tax. The penalty for late filing is 5% of the tax due for every month the return is late up to a maximum of 25% of the tax due. Interest at the prevailing quarterly rates will be added from the due date of the return until the debt is paid in full.

Answer 4

if the tax man has NOT been chasing you than i would suggest you just pay the $200 and you will not here of it again.
However if you have been receiving letters from the man than it would equate to 6%pa. In my experience and i have done this you can call the tax man and ask for help stating that you can not come up with all the money at one time and that you would like to pay it of over (you pick the time though make it a long period) the tax man will never turn you down. once you have done this agreement there will be no further interest changed. And above all you will have given yourself a good name with the man.

Answer 5

A friend of my started to received letter on 2004 for his 1997 taxes that he owe and he had to pay almost double (penalties and interest) of the actual amount.