USTaxPenaltySaverHow Much Is the Failure-to-File Penalty?
The failure-to-file penalty under IRC 6651(a)(1) is 5% of the unpaid tax for each month or partial month the return is late. A partial month counts as a full month, so even being one day late triggers the full 5% for that month. The penalty caps at 25% of the unpaid tax after 5 months.
For example, if you owe $10,000 in taxes and file 3 months late: Month 1 penalty is $500 (5%), Month 2 is $500, Month 3 is $500, for a total failure-to-file penalty of $1,500. If you filed 6 months late, the penalty would be capped at $2,500 (25%).
The penalty is based on the tax amount NOT paid by the original due date. If you paid 80% of your tax by April 15 and the remaining 20% was unpaid when you filed late, the penalty applies only to that unpaid 20%. This is why the IRS recommends paying as much as you can by the due date even if you cannot file on time.
The 25% Maximum Cap
The failure-to-file penalty stops accruing after 5 months (5 x 5% = 25%). After 5 months of non-filing, the penalty remains at 25% of the unpaid tax regardless of how much longer you wait to file. However, the failure-to-pay penalty (0.5% per month, up to 25%) continues separately, and interest continues indefinitely.
Combined, if you never file and never pay, the maximum penalty exposure is 47.5% of the tax owed (25% FTF + 22.5% FTP after the combined penalty offset), plus interest. On a $10,000 tax debt, that is $4,750 in penalties alone, before interest.
Minimum Penalty for Filing 60+ Days Late
There is a special minimum penalty rule for returns filed more than 60 days after the due date (including extensions). The minimum failure-to-file penalty is the lesser of $510 (for tax year 2025 returns, this amount is adjusted annually for inflation) or 100% of the tax shown as due on the return.
This means even on a very small tax balance, filing more than 60 days late triggers a significant penalty. If you owe only $200 in tax and file 61 days late, the penalty would be $200 (100% of the tax), not the $20 that 5% per month for 2 months would calculate. This rule specifically targets chronic late filers.
Combined Penalty: What Happens When You Also Owe FTP
In practice, most taxpayers who file late also pay late, triggering both the failure-to-file and failure-to-pay penalties simultaneously. The IRS has a coordination rule: when both penalties apply for the same month, the failure-to-file penalty is reduced by the failure-to-pay penalty amount.
The math: For each month both apply, you pay 4.5% (FTF reduced) + 0.5% (FTP) = 5% total. This coordination lasts for the first 5 months. After 5 months, the FTF penalty is maxed at 22.5% (with the offset), and only the FTP penalty (0.5% per month) continues accruing up to its own 25% maximum.
Use our free penalty calculator to see exactly how the combined penalty applies to your situation. Enter your tax amount, original due date, filing date, and payment date to get a precise breakdown.
How to Calculate Your Exact Penalty
The calculation involves counting the months late, applying the 5% rate, checking for the combined penalty offset (if FTP also applies), checking for the 60-day minimum, and adding interest on the penalty from the return due date. Each of these steps has nuances that can change the total.
Our free IRS penalty calculator handles all of these calculations automatically. Enter your unpaid tax amount, the original due date, and the date you filed (or plan to file), and get an instant breakdown showing: FTF penalty by month, any FTP penalty, the combined penalty offset, the 60-day minimum check, and accrued interest.
How to Reduce or Remove the Penalty
First-Time Abatement: If you have not had any penalties (except estimated tax) in the prior 3 tax years, FTA can remove the entire failure-to-file penalty. On a $10,000 tax balance filed 5 months late, that saves you $2,500. Request by calling 800-829-1040.
Reasonable Cause: If you do not qualify for FTA, you can request abatement based on reasonable cause. The IRS recognizes 11 categories of reasonable cause, including serious illness, death in the family, natural disaster, and reliance on a professional. You must submit documentation supporting your claim.
File as soon as possible: Even if you cannot pay, file the return immediately. The failure-to-file penalty is 10 times higher than the failure-to-pay penalty (5% vs 0.5%). Filing the return and not paying is significantly better than not filing at all.
Request an extension before the deadline: If you know you cannot file on time, file Form 4868 for an automatic 6-month extension before the April 15 deadline. This eliminates the failure-to-file penalty entirely (though the failure-to-pay penalty still applies if you owe).
Key Takeaways
The failure-to-file penalty is the most expensive common IRS penalty at 5% per month (25% maximum). It is 10 times more expensive than the failure-to-pay penalty. The single best thing you can do to minimize penalties is file on time, even if you cannot pay in full.
If you have already filed late, check your FTA eligibility immediately. Millions of taxpayers qualify for FTA and do not know it. A single phone call can save you 25% of your tax balance in penalties.
Use our free calculator to verify the penalty amount on your notice. The IRS does make mistakes, and if the calculated amount does not match, you have grounds to dispute the notice.