Tax Penalties

There are many sections of the Internal Revenue Code (IRC) devoted to the subject of tax penalties. For the average business and individual taxpayer, though, the most important ones are the failure-to-file (FTF), failure-to-pay (FTP), and failure-to-deposit (FTD) penalties. The FTF penalty is 5% per month, up to a maximum of 25%. The FTP penalty is .5% (one-half of 1%) per month, up to a maximum of 25%.

You can see that the FTF penalty reaches 25% much more quickly than the FTP penalty, and it’s for this reason: the IRS encourages taxpayers to get into and stay in the system of tax return filing and tax paying. Even if you can’t pay the tax right away, always file your tax return to avoid the higher penalty. Filing the tax return will also start the 3-year audit clock, after which time, the IRS can no longer propose changes to your tax return (with a few exceptions).

There are ways to reduce or eliminate tax penalties, but the taxpayer must have “reasonable cause” for the failure to file a return, failure to pay the tax, or failure to deposit the tax. David A. Sprecace has more than 22 years of experience helping taxpayers with tax-penalty problems. Call 303-454-8260 or email Dave at to set up a phone consultation.


Colorado Office
600 17th St #2800s

Denver, CO 80202

Client Reviews

Dave has ridden to our rescue on many occasions. It’s not that I try to get in trouble but Dave is always there to bail me out. Dave went toe-to-toe with the IRS over a several year legal battle. Nothing like having a...

- Russell and Lisa P.

My business partner and I hired Dave to represent us with an IRS tax audit of our company and individual tax returns. There were other family members and other businesses involved, and the IRS initially wanted more than...

- Mark M.

I called Dave to help me file several years of income tax returns. After the returns were filed, Dave filed an Offer in Compromise to get rid of the old taxes. The IRS accepted a small fraction of the original amount...

- Mike W.

When I needed to buy out my business partner, Dave told me of the possible pitfalls with the Operating Agreement, walked me through the entire process, helped me value the company, and make an offer. I was able to keep...

- Yvonne A.

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