Failure to File Penalty — Guide
Overview
The failure to file penalty applies if you do not file your tax return by the due date, including extensions. A notice or letter will be sent if the penalty applies.
Understanding your IRS notice or letter
Penalty Amount
The failure to file penalty depends on the type of tax return you file. It applies to individuals and most businesses that fail to file Forms 1040 and 1120.
How the Penalty is Calculated
- 5% of the tax due for each month or partial month the return is late
- Maximum accrual is 25%
- Tax required on the return minus timely paid tax and refundable credits
Forms 1040 and 1120 Minimum Failure to File Penalty
| Return Due Date (without extension) | Minimum Penalty |
|---|---|
| After 12/31/2024 | $510.00 |
| 01/01/2024 to 12/31/2024 | $485.00 |
| 01/01/2023 to 12/31/2023 | $450.00 |
| 01/01/2020 to 12/31/2022 | $435.00 |
| 01/01/2018 to 12/31/2019 | $210.00 |
| 01/01/2016 to 12/31/2017 | $205.00 |
| 01/01/2009 to 12/31/2015 | $135.00 |
If both failure to file and failure to pay penalties apply, the failure to file penalty is reduced by the failure to pay amount (0.5% per month). After 5 months, failure to file penalty maxes out; failure to pay continues.
Form 1040 instructions: Late filing
Form 1120 instructions: Late filing
IRC Section 6651(a)(1)
Partnership Returns (Forms 1065, 1066, 8985)
The penalty applies to partnerships that fail to file a timely or complete return:
- Form 1065, U.S. Return of Partnership Income
- Form 1066, U.S. Real Estate Mortgage Investment Conduit (REMIC) Income Tax Return
- Form 8985, Pass-Through — Statement Transmittal/Partnership Adjustment Tracking Report (Required under Sections 6226 and 6227)
The penalty doesn’t apply if the partnership can show the failure was due to reasonable cause.
How we calculate the penalty
The failure to file penalty is charged for each month (or partial month) the failure continues, for up to 12 months. The penalty calculation and amount depend on the return:
- Form 1065 instructions: Late filing
- Form 1066 instructions: Late filing penalty
- Form 8985 instructions: Due dates
The penalty for each month is calculated by multiplying the applicable base penalty rate by the number of persons who were partners in the partnership at any time during the taxable year.
Forms 1065, 1066 and 8985 Failure to File Base Penalty Rates
| Return Due Date (without extension) | Base Penalty Rate |
|---|---|
| After 12/31/2024 | $245.00 |
| 01/01/2024 to 12/31/2024 | $235.00 |
| 01/01/2023 to 12/31/2023 | $220.00 |
| 01/01/2021 to 12/31/2022 | $210.00 |
| 01/01/2020 to 12/31/2020 | $205.00 |
| 01/01/2018 to 12/31/2019 | $200.00 |
| 12/31/2009 to 12/31/2017 | $195.00 |
Internal Revenue Code Section 6698: Failure to file partnership return
Small Partnership Penalty Relief
Penalty relief for reasonable cause for filing a late or incomplete return will be presumed for certain small partnerships if certain criteria are met:
- The partnership must consist of 10 or fewer partners. Husband and wife (or their estate) filing jointly is considered one partner.
- Each partner is either an individual (excluding nonresident aliens), or the estate of a deceased partner.
- Each partner's items of income, deductions, and credits are allocated in the same proportion as all other items.
- Each partner reported the partner’s share of partnership income on the partner’s timely filed income tax return.
This relief is provided under Rev. Proc. 84-35.
Partnership Returns (Forms 1065, 1066, 8985)
The penalty applies to partnerships that fail to file a timely or complete return:
- Form 1065, U.S. Return of Partnership Income
- Form 1066, U.S. Real Estate Mortgage Investment Conduit (REMIC) Income Tax Return
- Form 8985, Pass-Through — Statement Transmittal/Partnership Adjustment Tracking Report (Required under Sections 6226 and 6227)
The penalty doesn’t apply if the partnership can show the failure was due to reasonable cause.
How we calculate the penalty
The failure to file penalty is charged for each month (or partial month) the failure continues, for up to 12 months. The penalty calculation and amount depend on the return:
- Form 1065 instructions: Late filing
- Form 1066 instructions: Late filing penalty
- Form 8985 instructions: Due dates
The penalty for each month is calculated by multiplying the applicable base penalty rate by the number of persons who were partners in the partnership at any time during the taxable year.
Forms 1065, 1066 and 8985 Failure to File Base Penalty Rates
| Return Due Date (without extension) | Base Penalty Rate |
|---|---|
| After 12/31/2024 | $245.00 |
| 01/01/2024 to 12/31/2024 | $235.00 |
| 01/01/2023 to 12/31/2023 | $220.00 |
| 01/01/2021 to 12/31/2022 | $210.00 |
| 01/01/2020 to 12/31/2020 | $205.00 |
| 01/01/2018 to 12/31/2019 | $200.00 |
| 12/31/2009 to 12/31/2017 | $195.00 |
Internal Revenue Code Section 6698: Failure to file partnership return
Small Partnership Penalty Relief
Penalty relief for reasonable cause for filing a late or incomplete return will be presumed for certain small partnerships if certain criteria are met:
- The partnership must consist of 10 or fewer partners. Husband and wife (or their estate) filing jointly is considered one partner.
- Each partner is either an individual (excluding nonresident aliens), or the estate of a deceased partner.
- Each partner's items of income, deductions, and credits are allocated in the same proportion as all other items.
- Each partner reported the partner’s share of partnership income on the partner’s timely filed income tax return.
This relief is provided under Rev. Proc. 84-35.