Penalties for filing a late tax return

April 15 is the annual deadline for most people to file their federal income tax return and pay any taxes they owe. Taxpayers residing overseas on April 15 are allowed an automatic 2-month extension to file their return and pay any amount due without requesting an extension. For taxpayers who qualify for the 2-month extension to June 15, penalties are assessed for tax payments made after the extended due date. However, even if you are allowed an extension, you will have to pay interest on any tax not paid by the regular April 15 due date. Several other penalties may apply for filing a late tax return.


A failure-to-file penalty may apply if a tax return is not filed by the filing deadline. A failure-to-pay penalty may apply if less than the full amount of tax owed is paid by the filing deadline. As the failure-to-file penalty is generally more than the failure-to-pay penalty, you should always file your tax return on time, even if you are not able to pay the full amount of tax owed by the due date.


The IRS requires certain taxpayers to file information reporting forms and returns. For example, under certain conditions, ownership with respect to foreign corporations and partnerships must be reported to the IRS. Taxpayers with foreign financial assets that exceed a certain amount, may be required to report those assets to the IRS on Form 8938. The penalties for failure to file information reporting forms and returns generally apply whether or not any tax is due.


With the introduction of 2 amnesty programs, the Offshore Voluntary Disclosure Program and the Streamlined Filing Compliance Procedures, the IRS has recognized that taxpayers who were previously unaware of the tax filing obligations would like to become tax compliant. With the Offshore Voluntary Disclosure Program, the IRS the benefit of reduced penalties to disclose foreign financial assets. Taxpayers who can certify their failure to file tax returns is due to negligence, inadvertence, or mistake or conduct that is the result of a good faith misunderstanding of the requirements of the law, qualify for the Streamlined Procedures. Under the Streamlined Procedures, the IRS waives all penalties for taxpayers who live outside the United States.

We strongly recommend that you become compliant as soon as possible. Please contact us with any questions you may have. Our tax professionals have helped many U.S. taxpayers become compliant.