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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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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. |
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.
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.
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 |
|
| Penalty for Negligent or Intentional Disregard of the Law |
10% of any additional unpaid tax if you were assessed additional tax. |
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 | 2024 | 2023 | 2021 - 2022 | 2019 - 2020 | 2017 - 2018 |
|---|
| Interest Rate | 8% | 5% | 3% | 5% | 4% |
