Failure to file is five percent of the unpaid tax, not of income

What the five percent actually multiplies

Failure to file is five percent of the unpaid tax per month or part of a month, and it is capped at twenty five percent. The base is the tax required to be shown, minus timely payments and refundable credits.

If the return is more than sixty days late, a minimum from a table can apply on Form 1040 and Form 1120. That minimum will not grow past the unpaid tax. The dollar in the table stays on the IRS page, because the table gets adjusted and a copied figure goes stale.

Part of a month counts as the month. Paying in the middle of it does not wipe the charge away. A year with nothing unpaid is a different conversation, and a partnership can still have a charge of its own.

Source. Failure to file is five percent of the unpaid tax per month or part of a month, capped at twenty five percent. The base is tax required to be shown, minus timely payments and refundable credits. After sixty days a minimum table can apply, and the dollar in that table is on the page. Read 29 September 2026 at https://www.irs.gov/payments/failure-to-file-penalty

Where this desk stops

Working out which charge a letter means, and keeping the books that stop the next one, is what happens here. A hearing, an appeal or any filing made on your behalf as your representative belongs with a firm that does that work, and no CPA license sits at this desk either, so signed reports on your statements go elsewhere as well. You'll hear both of those early rather than late. The longer drawing of the limit lives on the disclosures page.

Bring the return, not a guess about income

Once the base is clear, the letter is easier to trust or easier to question. Both outcomes are useful.

If your notice is about a partnership or an S corporation, do not stop on this percent. Those forms have their own rows.