Will Any Penalties Arise from My Tax Audit?

On: March 27, 2023

One of the biggest worries that taxpayers have, when they see a notice from the IRS, is that they owe money to them. When you do owe money to the IRS, they will work hard to collect it from you and they will take collection actions against you should you not pay them.

Taxpayers who do owe the IRS money and cannot pay it all at once or taxpayers who forgot to file their return on time can face penalties and fines from the IRS. If you owe the IRS money and you are worried about the fines and penalties associated with the debt, don’t hesitate to reach out to an experienced tax professional. They can assist you in understanding what you owe, how much you owe, and exploring your payment options with you.

Will the IRS Charge Me Penalties After My Tax Audit?

They can. Many of the penalties that the IRS imposes are related to errors that appear on a taxpayer’s tax returns. There are many different types of penalties that can be assessed by the IRS and, unfortunately, when you do undergo a tax audit, you are probably going to end up with a larger than expected tax bill at the end of it.

What Will Cause Me to Incur a Penalty?

Depending on what the IRS finds wrong during the tax audit will dictate just what the penalty is. Some of the most common reasons why a penalty occurs include:

• Overstating pension liabilities
• Not following IRS rules or guidelines (i.e. failing to file a tax return)
• Misstating the value of your property
• Underreporting income on your taxes
• Not paying taxes by the due date
• Understating the amount of an estate or gift
• Underreporting or not reporting any other transactions that should be reported

What Types of Penalties Happen After a Tax Audit?

One of the conclusions of your tax audit is to determine if you owe any additional money to the IRS. Through the audit, the IRS will determine if you owe them any additional interest or any additional penalties. If you do, you can expect to receive a bill for them.

Additional Interest Penalty 

If you do not file your tax return on time or you do not pay your taxes in full by the due date, you can expect to have an additional interest penalty.

Civil Penalties 

There are two main types of civil penalties which include a civil penalty and a civil fraud penalty. A civil penalty is one where you have made an error on your tax return. Should that error result in a significant discrepancy between what was reported and claimed, you may owe an additional civil penalty of up to 20 percent of the amount that you did not pay.

A civil fraud penalty is applied when you underpaid your taxes due to fraud. This means that the IRS believes you committed fraud and you can incur a very large penalty in these cases. In fact, the penalty can be as much as 75 percent of the amount you underpaid.

Criminal Penalty 

The most serious type of penalty the IRS can impose is a criminal penalty. This is usually done in severe cases of fraud and evasion. The IRS can impose fines and put you in jail.

Leading Tax Group Can Help You During Your Tax Audit 

Undergoing an IRS tax audit is not something you should ever do alone. It can be scary, confusing, and difficult. Knowing and understanding your taxes is complicated, especially if you are hit with a bunch of different penalties and interest charges.

The experts at Leading Tax Group are here to assist you and can represent you during your tax audit. Our goal is to limit the penalties that you face and explore your options with you so that you remain in compliance with the IRS.

Suffering from a tax liability should never be something you have to worry about. Call the professionals at Leading Tax Group today to discuss your case.