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Penalties and Interest for Businesses

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Filing and paying your taxes late costs you money. Use the following information to avoid costly penalties and interest.

You may request an abatement (cancellation) of late-filing or late-payment penalties if you have a reasonable cause. For details, see Penalty Abatement for Businesses.

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Types of Penalties [+]

Different penalties may apply depending on your situation. The most common penalties are listed in the table below.

TYPE OF PENALTY	HOW CAN I AVOID THIS PENALTY?
Late Filing	File your returns by the due date or extended due date (if you have a filing extension).
Late Payment	Pay your tax in full by the due date (even if you have a filing extension).
Extended Delinquency for Missing Returns	If you receive a Demand to File letter, respond as instructed within 30 days.
Payment Method	If required, make your tax payments electronically. (View our Electronic Payment Requirements.)
Repeat Late Filing or Late Payment	Do not file or pay late more than 3 times within a 25-month period.
Late Payment for June Accelerated	If required, pay your full June Accelerated Payment by the due date.
Late Payment for Tax Assessments	If you receive a Tax Order letter, respond as instructed within 60 days.

Late Filing Penalty Costs [+]

The late filing penalty is 5% of any tax that is not paid by the regular due date.

We automatically extend the filing due date for some tax types. The following table shows some examples.

TAX TYPES	THE EXTENDED FILING DUE DATE IS:
Fiduciary Partnership S Corporation	Six months from the regular due date if all taxes are paid or any period for which the IRS has granted an extension to file the federal return.
Corporate Franchise Occupation Unrelated Business Income Tax (UBIT)	Seven months from the regular due date.
Estate	Six months from the regular due date or the same extended filing due date granted by the IRS, whichever is later.

Note: Even if you have a filing extension, you must pay your tax by the regular due date, or we will charge a late payment penalty.

Late Payment Penalty Costs [+]

The late payment penalty is 5% to 15% of any tax that is not paid by the regular due date. The table below shows the most common taxes.

TAX TYPES	THE LATE PAYMENT PENALTY IS:
Sales Withholding MinnesotaCare Alcohol Cigarettes, Tobacco Lawful Gambling Insurance Environmental	5% of any tax not paid by the regular due date. Another 5% for each additional 30 days, or fraction of 30 days, the tax is not paid in full (to a maximum of 15%).
Petroleum	1% per day of any unpaid tax or free not paid by the due date (up to a maximum of 10%).
Fiduciary Partnership S Corporation Corporate Franchise Occupation Unrelated Business Income Tax (UBIT)	6% of any tax not paid by the regular due date. Another 5% if you file after the regular due date and do not pay in full when you file. Note: For Corporate Franchise, UBIT, and Occupation taxes, we will not add this penalty if you pay at least 90% of the tax by the regular due date and pay any remaining tax by the extended due date.
Estate	6% of any tax not paid by the regular due date. Another 5% if you file after the regular due date and do not pay in full when you file. Note: For Estate Tax, we will not add this penalty if you meet one of the following requirements: Properly elect to pay the tax in installments. Receive an extension to pay federal estate tax. Pay at least 90% of the tax by the regular due date and pay any remaining tax by the extended due date.

Note: To avoid a late payment penalty, you must pay your tax by the regular due date, even if you have a filing extension.

Other Penalty Costs [+]

The amount varies by the type of penalty. The following table shows the most common types of penalties.

TYPE OF PENALTY	THE PENALTY IS:
Extended Delinquency for Missing Returns	5% of the tax not paid prior to the demand or $100 (whichever is more).
Payment Method	5% of the non-electronic payment.
Repeat Late Filing or Late Payment	25% of the tax not timely paid for each period you file or pay after the due date. Note: A repeat penalty can only be assessed after a warning letter is issued.
Late Payment for June Accelerated	10% of the amount not paid by the June Accelerated Payment due date
Late Payment for Tax Assessments	5% of the tax not paid within 60 days of the assessment date (or after resolution of an appeal). 5% of the tax not paid within 180 days of the assessment date.
Penalty for Negligent or Intentional Disregard of the Law	10% of any additional unpaid tax if you were assessed additional tax.

Interest [+]

We charge interest on tax and penalties from the time the debt is past due until it is paid in full. Interest rates may change annually. The following table shows interest rates for recent years.

YEAR	2023	2021 - 2022	2019 - 2020	2017 - 2018	2013 - 2016
Interest Rate	5%	3%	5%	4%	3%

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Last Updated

December 01, 2022

Penalties and Interest for Businesses

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