Federal Tax Penalties & Interest in Oklahoma City
Where to Send Federal Tax Return?
If you are filing tax returns in Oklahoma, you can visit the Oklahoma tax commission to get the address of the appropriate IRS office where you should file your papers.
The IRS has different locations where it accepts different forms depending on your situation. More information can be found on the IRS website, or you can contact Hutton Tax Solutions for assistance.
In this article, we consider everything you need to know about federal income taxes in Oklahoma City and all the penalties and interest attached.
How Much Federal Tax Should I Pay?
Taxes are calculated based on your taxable income. The marginal tax rate determines how taxable income is taxed, and tax brackets are the ranges of income tax rates. Every bracket has a different tax rate.
You can calculate how much you should pay using the IRS calculator.
Oklahoma Federal Tax Penalties and Interest
The amount you pay in penalties and interest for tax debts is calculated by the IRS and the Oklahoma Tax Commission (OTC). Usually, the amount you pay will depend on the amount you owe the IRS.
Penalties and interest from the IRS come in three kinds:
- Failure to file penalties
- Failure to make payment for penalties
Oklahoma Tax Return Due Date
Generally, the deadline for filing individual income tax returns and paying any tax due is April 15. During processing, the IRS verifies the mathematical correctness of taxpayers’ tax returns. If you owe any tax, penalty, or interest, you will get a bill after processing is completed.
If the due date occurs on a weekend day or a legal holiday, the IRS will move the due date to the next working day. Under the law, your tax return is deemed timely if the envelope is addressed correctly, postmarked, and sent before the deadline.
You can seek an extension if you are unable to submit your tax return by the due date. Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return, must be filed before the due date of your return to get an automatic 6-month extension of time to file.
A filing extension does not extend the deadlines for payment. You may be liable to a late payment penalty on any tax not paid by the initial due date of your return.
Federal Tax Interest Rate in Oklahoma
Interest accrues on unpaid taxes from the due date of the return until the date of complete payment. The interest rate is established on a quarterly basis and is equal to the federal short-term rate plus three percent. Daily interest is compounded.
Oklahoma Federal Tax Penalties
The following are some of the different types of Oklahoma federal tax penalties:
Underpayment of Estimated Tax Payment
The underpayment of anticipated tax penalties applies to both individuals and businesses. In both instances, a penalty is assessed when a person or business fails to pay the correct tax on their income or makes a late payment.
The penalty is computed using the amount of the underpayment, the day on which the payment was due but not made, and the quarterly interest rate for underpayments.
Penalties for Inaccuracy
Individuals incur accuracy-related fines when they claim deductions they did not seek or fail to declare all of their income. There are two frequent instances of this:
- Negligence: Individuals may be subject to this penalty if they fail to reasonably comply with tax return requirements or willfully violate tax return laws while submitting a tax return.
- Substantial understatement of income tax: This penalty is assessed when a taxpayer understates their income tax liability by 10% or $5,000, whichever is greater.
The dishonored check penalty is assessed if a person’s bank account lacks adequate money to fulfill the payment. The bank will return and invalidate the electronic payment or cheque, and the amount will be deemed unpaid.
In this instance, the cost of the penalty is the payment amount. If the payment amount is less than $1,250, the penalty will be $25. However, if the payment amount is more than $1,250, the penalty will be 2% of the payment amount.
Federal Tax Penalties for Late Payment in Oklahoma
If you submit a tax return but pay only part of the amount of tax due by the due date, you will often be subject to a late payment penalty. The failure-to-pay penalty is 0.5% of one percent for each month or a fraction of a month, up to a maximum of 25% of the amount of tax that remains unpaid from the day the return was due until the tax is paid in full.
If the tax remains due ten days after the IRS sends a notice of intent to collect the property, the 0.5% of one percent rate jumps to one percent. If you submit your tax return before the due date and seek an IRS payment plan, the rate of one-half of one percent is reduced to one-fourth of one percent for each month that the agreement is in place.
Oklahoma Federal Tax Evasion Penalties
In Oklahoma, tax evasion or tax fraud consists of any intentional attempt to avoid paying legally owing taxes. Frequently, this is followed by efforts to convince the authorities that your tax due is smaller than it really is.
The Oklahoma Tax Commission Rules clearly prohibit the following practices, among others:
- Failure or refusal to submit a tax return or report
- Filing a fake report or return
- Writing a fraudulent tax check.
- Not providing tax records as requested.
- Any measures aimed to deceive the government and avoid tax payment.
- Tax fraud and evasion are often committed via the concealment of income and the illicit transfer of property.
Tax fraud or evasion may result in various consequences, including paying back taxes, imprisonment, and hefty fines. The state may garnish your earnings or file liens on your property to collect unpaid taxes, fines, and interest.
The following are some penalties for certain federal tax offenses in Oklahoma State:
- Failure to submit a tax return is punishable by up to one year in jail and penalties of up to $5,000.
- Filing a false or fraudulent tax return is a felony punishable by two to five years in prison and fines ranging from $1,000 to $50,000.
- Knowingly confirming a fraudulent return is a crime punishable by at least 90 days and up to 10 years in jail, as well as penalties ranging from $500 to $5,000.
- Notably, tax fraud in Oklahoma carries a 50 percent penalty on all taxes owed.
How Do I Get Rid of Tax Penalties and Interest in Oklahoma?
The IRS may waive your tax penalties and interests if you can demonstrate reasonable cause and that your failure was not deliberate.
Making a payment or entering an IRS payment plan in good faith as soon as you can, may assist in demonstrating that your first failure to follow deadlines for payment was due to a valid excuse and not deliberate neglect.
If you have good grounds for penalty abatement and are assessed for penalty costs, you can send a written demand along with the bill to the IRS service center or contact them via phone.
Alternatively, you can seek Tax and IRS debt resolution through a tax attorney.
Generally, the IRS does not reduce interest charges, and they continue accumulating until all taxes, penalties, and interest are paid in full.
If you have any other questions or need IRS help, you can contact Hutton Tax Solutions for more information.