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By: Mark Etinger
To be able to achieve tax debt relief, you need to be able to understand all the penalties that are possible that can add to your debt even further. It's important to have a good grasp on just what the consequences can be for different actions, how you can avoid or contest them, and what it means for you financially.

The first thing you need to know is if you are getting a refund, there is no penalty for filing past tax day. A lot of people don't realize this but the truth is, the IRS doesn't mind if you ask for your refund money late. They just want the money you owe them on time. That's where penalties come in: when you owe and don't pay by the day they are due.

There are three different penalties to be aware of. The first is failure to file. This means you just didn't bother sending in your paperwork to the IRS that year. This penalty is calculated from the time of the deadline to the date you actually filed. The penalty charges 5% of your taxes due each month you are late, up to a total of 25%.The failure to pay penalty means you did file, you just didn't pay on time. The penalty is .5% for each month the tax wasn't paid in full.

That means unless you've worked out a payment arrangement, partial payments won't get you out of the penalty. There is no limit on how high the penalty can go, which is what gets a lot of people into trouble.Lastly is interest, which is calculated based on how much tax you owe. Currently the interest rate for underpayment is 4%, but this changes every 3 months. It's calculated for every day your balance isn't paid in full.

These are all important numbers to know and keep track of, for a variety of reasons. First of all, if you are hit with any of these penalties, you won't be surprised by the number. Second, if you feel like you are paying more than you should be, you can do the math yourself to make sure you aren't being overcharged.Keep track of penalties so you can get tax debt relief as soon as possible. With knowledge comes power and you should always know as much as you can about the way the IRS works when you owe money. That way you can be financially and mentally ready.

------------------------------ is the office of a NY tax attorney who specializes in innocent spouse relief, levies, payment arrangement, tax debt relief and IRS collections. Visit our blog at
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