Question

If a business operates without paying taxes, what possible irs business tax penalties does it face?

Answer

A business that failed to file and paid no taxes by its return’s due date is subject to:

  • Penalties
  • Late-filing penalty
  • Late-payment penalty
  • Interest

These will apply until the business owner pays the balance of the business taxes. If the IRS determines that fraud is involved, a business owner will be subject to:

  • Non-payment penalties and additional fines
  • Sanctions
  • Possible criminal prosecution with jail time

Also, if a business has employees and doesn’t pay payroll taxes, it might be subject to the trust fund recovery payment. This is a 100% penalty that can be assessed against any person in the employer’s business who:

  • Is responsible for collecting, accounting for, and paying withheld employment taxes
  • Willfully fails to collect or pay these taxes

Related Topics

Related Resources

Estimate Extension Tax Liability

Estimate your tax liability for filing for an extension with help from the tax experts at H&R Block.

Gift Tax

Gift tax is typically paid by the donor unless the recipient agrees to pay the gift tax. Learn more from the tax experts at H&R Block.

IRS Error (Penalty Abatement)

Get the facts about penalty abatement due to an IRS error. Read the IRS definition and get more insight from the experts at H&R Block.

Federal Tax Updates

Find tax law updates and get tax answers at H&R Block.