12.
Penalties and Interest
This is archived information that pertains only to the 2006 Tax Year. If you
are looking for information for the current tax year, go to the Tax Prep Help Area.
Penalties and interest may result from any of the following acts.
-
Failing to collect and pay over tax as the collecting agent (see Trust fund recovery penalty, later).
-
Failing to keep adequate records.
-
Failing to file returns.
-
Failing to pay taxes.
-
Filing returns late.
-
Filing false or fraudulent returns.
-
Paying taxes late.
-
Failing to make deposits.
-
Depositing taxes late.
-
Making false statements relating to tax.
-
Failing to register.
-
Misrepresenting that tax is excluded from the price of an article.
Failure to register.
The penalty for failure to register if you are required to register, unless due to reasonable cause, is increased
to $10,000 for the initial
failure, and then $1,000 each day thereafter you fail to register.
Claims.
There are criminal penalties for false or fraudulent claims. In addition, any person who files a refund claim, discussed
earlier, for an excessive
amount (without reasonable cause) may have to pay a penalty. An excessive amount is the amount claimed that is more than the
allowable amount. The
penalty is the greater of two times the excessive amount or $10.
Trust fund recovery penalty.
If you provide taxable communications or air transportation services, you have to collect excise taxes (as discussed
earlier) from those persons
who pay you for those services. You must pay over these taxes to the U.S. Government.
If you willfully fail to collect or pay over these taxes, or if you evade or defeat them in any way, the trust fund
recovery penalty may apply.
Willfully means voluntarily, consciously, and intentionally. The trust fund recovery penalty equals 100% of the taxes not
collected or not paid over
to the U.S. Government.
The trust fund recovery penalty may be imposed on any person responsible for collecting, accounting for, and paying
over these taxes. If this
person knows that these required actions are not taking place for whatever reason, the person is acting willfully. Paying
other expenses of the
business instead of paying the taxes is willful behavior.
A responsible person can be an officer or employee of a corporation, a partner or employee of a partnership, or any
other person who had
responsibility for certain aspects of the business and financial affairs of the employer (or business). This may include accountants,
trustees in
bankruptcy, members of a board, banks, insurance companies, or sureties. The responsible person could even be another corporation—in
other
words, anyone who has the duty and the ability to direct, account for, or pay over the money. Having signature power on the
business checking account
could be a significant factor in determining responsibility.
