Penalties for Unfiled Tax Returns in Alexandria

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Leaving a federal tax return unfiled can create additional costs beyond the tax you originally owed. Depending on your circumstances, the IRS could assess failure-to-file and failure-to-pay penalties, and interest can continue to increase the outstanding balance. While relief from these penalties is possible, it’s important to understand the potential risks you face.

The penalties for unfiled tax returns in Alexandria can be substantial, especially if you have a large unpaid tax bill. An attorney or Enrolled Agent at Pontius Tax Law can evaluate your tax history and circumstances to determine which IRS procedures could help you address the unfiled tax returns and resolve the resulting tax debt.

What Penalties Can Stem From Unfiled Returns?

The IRS can assess different civil penalties depending on what happened with your return and payment. Some of the potential penalties Alexandria residents face due to unfiled tax returns include the following situations.

Failure-to-File Penalty

The failure-to-file penalty applies if you don’t submit a required tax return by its due date. For individuals and many business returns, the IRS generally calculates the penalty at 5% of the unpaid tax for each month or partial month the return remains late, up to 25%.

Failure-to-Pay Penalty

Filing a return and paying the tax are separate obligations. In other words, you could face a failure-to-pay penalty even after you file the missing return if you still have an unpaid balance. The standard failure-to-pay penalty is generally 0.5% of the unpaid tax for each month or partial month the tax remains unpaid, up to 25%.

Dishonored Check Penalty

A dishonored payment can create another penalty. The IRS may assess a Dishonored Check or Other Form of Payment Penalty if your bank doesn’t honor a check or electronic payment because your account lacks sufficient funds.

For a payment of $1,250 or more, the penalty is generally 2% of the payment amount. For payments below $1,250, the penalty is the lesser of $25 or the amount of the payment. Relief could be available if you made the payment in good faith and had reasonable cause to believe sufficient funds were available.

Does the IRS Offer a One-Time Penalty Forgiveness?

The IRS has historically offered one-time relief for taxpayers who fail to file their taxes on time, but only when they meet certain requirements.. This administrative relief can apply to certain penalties, but only if you have a history of filing your returns on time.

However, the IRS began transitioning away from this one-time forgiveness to a new type of relief known as Automatic Exemption from Penalty (AEP) in summer 2026. If IRS records show that you filed your returns on time and paid properly during the prior three years, it might not assess penalties for the tax year where you didn’t file in a timely manner.

Other Relief for Unfiled Tax Return Penalties

An assessment from the IRS doesn’t always mean you have to pay the entire penalty. The IRS recognizes several forms of penalty relief, and the option available to you will depend on the circumstances. In Alexandria, you could be eligible for relief from penalties for unfiled tax returns in the following ways:

First Time Abatement
Automatic Exemption from Penalty
Reasonable cause
Statutory exceptions
Dishonored payment relief

An attorney or former Enrolled Agent can help you determine which of these options might be available to you.

Talk to an Attorney in Alexandria About Relief From Penalties for Unfiled Tax Returns

If you have questions about the penalties for unfiled tax returns in Alexandria, we can help assess your options. At Pontius Tax Law, we can answer questions about these penalties and develop a strategy on how to come into compliance. Call us today to explain your situation and learn what comes next.