Tax Facts - Taxpayer Penalties
Taxpayers who do not meet their tax obligations may face penalty
or interest charges. To avoid such charges, you should pay the full
amount of tax you owe by the due date.
The main kinds of charges for failing to meet tax obligations
- Interest on the amount of tax you owe if you
have underpaid your tax. The interest rates charged are based on
- A late filing penalty if you do not file
a return by the due date.
- A late payment penalty if you post or
deliver a payment to IRD after the date it was due.
- A shortfall penalty where the correct
amount of tax is higher than the amount you paid (eg, because of an
understatement of tax, or where the amount of a refund or loss is
reduced). These penalties can be as high as 150% (for evasion) and
may include imprionment for serious instances of evasion.
- EMS non payment penalties where you file an
employer monthly schedule but do not pay the full amount payable on
that schedule. These penalties are in addition to any of the
other penalites that may also then be payable.
Solutions such as tax pooling can also be used to ease taxpayer
concerns and the resulting exposure to use of money interest.
For more information about tax pooling and your exposure to tax
penalties, give us a call. For more information about tax
penalties refer to the IRD's Obligations, Interest & Penalties
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