TAX NEWS - DECEMber 2009

Tax Penalties and Interest - Individuals Tax - State of Georgia tax

Q. How are interest and penalty calculated on unpaid taxes?

A. The penalties are as follows:

     A. Penalty for late filing of return - 5% of the tax shown on the return for each month or fractional part thereof up to 25%.

     B. Penalty for failure to pay tax shown on a return by the due date - 1/2 of 1% of the tax due for each month or fractional part thereof - up to 25%.

Note: The combined total of the penalty for late filing of return and penalty for failure to pay tax shown on a return cannot exceed 25% of the tax shown on a return.

     C. A penalty of $1,000 may be assessed against an individual who files a frivolous return. A frivolous return either does not contain information needed to compute the correct tax, or the information shown on the return reflects a substantially incorrect tax filed with the intent to interfere with the Georgia Tax Laws.

     D. Penalty for negligent underpayment of the tax - 5% of the underpayment.

     E. Penalty for fraudulent underpayment - 50% of the underpayment.

     F. Penalty for failure to file estimated tax - 9% per annum for the period of underpayment. Form 500 UET is available upon request for computation of underestimated installments.

     G. Interest is computed at 12% per annum on any unpaid tax from the due date until paid. An extension of time for filing does not give relief from late payment penalty or interest.


Q. Do I have to pay a late filing penalty if my return shows an overpayment and I file after April 15?

A. No.


Q. For Federal income tax purposes, the IRS does not charge a late payment penalty, for the period covered by the extension(s), if at least 90% of the actual tax liability is paid on or before the regular due date of the return through withholding, estimate tax payments or payments submitted at the time the extension is requested. Does Georgia have a similar rule?

A. Georgia statutes do not provide a specific exception to the late payment penalty in this situation. However, a taxpayer may be considered to have "reasonable cause" for the waiver of the late payment penalty, for the period covered by the extension, if the following requirements are met:

     1.The return under consideration is a return whose required filing date has been extended pursuant to a timely, valid and approved extension(s) under the appropriate laws, rules and regulations of this State;

     2.At least 90% of the actual tax liability is paid on or before the regular due date of the return through withholding, estimate tax payments or payments submitted with the extension request (560 or 560C); and
    
     3.Any balance due shown on the income tax return is properly remitted with the return when filed.

If this situation applies to you, please call Taxpayer Services at 1-877-GADOR11 (1-877-423-6711) and inquire about the procedure to request this penalty waiver.

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