What are the penalties for late payment or non-compliance with business tax obligations?

The penalties for late payment or non-compliance with business tax obligations vary depending on the circumstances. If you fail to file your tax return on time or pay the full amount owed, there are typically two types of penalties that may apply: a failure-to-file penalty and a failure-to-pay penalty. The failure-to-file penalty is assessed at 5% of the unpaid tax for each month or part of a month that the return is late, up to a maximum of 25% of the unpaid tax. The failure-to-pay penalty is 0.5% of the unpaid tax amount per month, up to a maximum of 25% as well. Additionally, interest accrues on any unpaid taxes from the original due date until the date of payment. The interest rate is determined quarterly and is based on the federal short-term rate, plus 3%. It's important to note that these penalties and interest can add up quickly, so it is strongly recommended to file and pay your business taxes on time to avoid unnecessary financial burden.