IRS PENALTIES & INTEREST - May 1 2008
Posted by Service Officer on April 30th, 2008
For American expatriates used to the tax filing deadline in mid-June, the 15th of April tax paying deadline can easily be overlooked. So down the road when those 2007 taxes are finally paid with the tax return, Expats can be surprised to receive an IRS interest assessment for late payment. So if the 2007 tax return has not yet been prepared, the best strategy - after 15 April and before 15 June - is to estimate and pay any taxes owed. When IRS receives your tax return, they first check the return for mathematical accuracy. If taxes are owed, they bill the taxpayer and charge interest from 15 April on the federal short-term rate plus three percent. Interest is compounded daily. A penalty for late payment of one-half of one percent of the tax owed for each month may also be assessed until the full 25% maximum penalty is applied for non-payment. For reasonable cause, penalties can be abated, but not interest. Assessed taxpayers can send an explanation together with the bill to the IRS service center in Austin for consideration. However IRS will not act to abate until the taxes owed are first paid. To assure payment is properly made, a check or money order should be payable to UNITED STATES TREASURY. Also on the check, remember to enter the tax year, form number and your telephone number. Form 1040-V should accompany payment. The expatriate mailing address is: Internal Revenue Service Centre, PO Box 660335, Dallas, TX 75266-0335. [Source: The Tax Baron Report MAR/APR08 ++]
