Earlier today, Bloomberg BNA, announced its 2017 projected tax rates (you can find more on those here).
The report doesn’t just focus on tax rates: it also takes a look at tax-related penalties. The Internal Revenue Code imposes penalties for failure to file returns, failure to furnish information returns, and failure to pay tax which may affect individuals, companies, trusts, and estates. Many of those penalties are now tied to annual inflation adjustments, which means that they vary from year to year. In addition, a number of penalties, including those aimed at tax preparers have dramatically increased.
“The trend toward tougher penalties continues as Congress passed legislation that may revoke the passports of taxpayers with seriously delinquent tax debt,” said George Farrah, Bloomberg BNA Tax & Accounting Editorial Director.
Two individual penalty thresholds to note:
- For tax years beginning in 2017, the amount of the additional tax payable for failure to file a tax return within 60 days of the due date shall not be less than the lesser of $210 or 100% of the amount required to be shown as tax on the return.
- And remember those new passport revocation rules? For purposes of the law, a “seriously delinquent tax debt” is defined as “an unpaid, legally enforceable federal tax liability” when a debt greater than $50,000, including interest and penalties, has been assessed and a notice of lien or a notice of levy has been filed. The $50,000 limit is adjusted each year for inflation and cost of living and for 2017, it remains at $50,000.
With respect to tax preparers, penalties can add up quickly. The penalty rates for tax preparers for 2017 are expected to look like this:
Other penalties affected by a change in rates include failure to file partnership and S corporation returns (the dollar amount used to determine the penalty in 2017 is $200 per partner or shareholder, respectively) and failure to file correct information returns. You can read all the details in the Bloomberg BNA full report, available here (downloads as a pdf).
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Remember that these are just projections (granted, educated projections). The Internal Revenue Service (IRS) will publish the official tax brackets and other tax numbers for 2017 later this year. It typically happens in October, so be sure to check back.
