Overview
Typically, you receive penalties and fees when you do not meet requirements. For example, when you:
- Don’t file on time
- Don’t pay on time
- Don’t pay enough estimated tax
- Don’t have enough taxes withheld from your paycheck
- Don’t pay electronically when you're required
- Make a dishonored payment (bounced check, insufficient funds)
These are our most common penalties and fees. Visit our Penalty reference chart for more information.
We also refer to the Revenue and Taxation Code (RTC) section related to the penalty or fee.
Penalties when you file a tax return late or don’t file
Delinquent filing penalty: Individuals and businesses
Why you received this penalty
You did not pay by the due date of the tax return and did not file your tax return by the extended due date.
- Individuals due dates
- Businesses due dates
Penalty
5% of the amount due:
- From the original due date of your tax return
- After applying any payments and credits made, on or before the original due date of your tax return, for each month or part of a month unpaid
The maximum penalty is 25%.
Individuals only
If your tax return shows a balance due of $540 or less, the penalty is either:
- $135
- 100% of the amount due
Whichever amount is less.
For instance, if your balance is:
- $134 or less: the penalty is equal to 100% of the amount due
- Between $135 and $540: the penalty is $135
Return late filing penalty: S corporations, partnerships, or LLCs treated as partnerships
Why you received this penalty
You did not file your return by the due date.
- Businesses due dates
Partnership penalty
- Before January 1, 2011: $10 for each partner/member, per month (up to 5 months).
- On or after January 1, 2011: $18 for each partner/member, per month (up to 12 months).
S Corporation penalty
- On or after January 1, 2011: $18 for each shareholder, per month (up to 12 months).
RTC 19172 and RTC 19172.5
Demand penalty: Individuals and businesses
Why you received this penalty
You did not file a return by the due date on the Demand for Tax Return letter. You may owe penalties and interest, even if your tax return shows that a refund is due.
Penalty
25% of the total tax amount due, regardless of any payments or credits made on time.
Penalties when you pay late or don’t pay
Late payment of tax penalty (underpayment and monthly penalty): Individuals and businesses
Why you received this penalty
You did not pay entire amount due by your payment due date.
- Individuals due dates
- Businesses due dates
Penalty
- 5% of the unpaid tax (underpayment), and
- 0.5% of the unpaid tax for each month or part of the month it’s unpaid not to exceed 40 months (monthly).
For LLCs, the penalty is computed on the underpayment of annual tax, LLC fee, and non-consenting non-resident (NCNR) tax, if applicable.
Estimated tax penalty: Individuals and businesses
Why you received this penalty
For your estimated tax payment, you either:
- Did not pay
- Paid late
- Underpaid
Penalty - individuals
We calculate the penalty on the unpaid amount from one of these (whichever is earlier):
- The due date of the estimated tax installment to the date we receive your payment
- The due date of the tax return
Visit Individuals due dates for the due dates.
The number of days late is first determined, then multiplied by the effective interest rate for the installment period. Visit interest rates for more information.
To avoid this in the future, increase your withholdings or make quarterly estimate payments.
Penalty - businesses
We calculate the penalty on the unpaid amount from the due date of the estimated tax installment to the following dates (whichever is earlier):
- The date we receive your payment
- The due date of your business return
Visit Businesses due dates for the due dates.
Bad check penalty (dishonored payment penalty): Individuals and businesses
Why you received this penalty
You sent us a payment and your financial institution declined (did not honor) that payment. Examples: Your check bounced, you did not have enough money in your bank account, or you stopped payment.
Penalty
If your payment was:
- $1,250 or more: 2% of payment amount
- Less than $1,250: $25 or the payment amount, whichever is less
Mandatory e-Pay penalty: Individuals and businesses
Why you received this penalty
You’re required to make payments electronically to FTB and you failed to do so.
Visit Mandatory e-pay for individuals or Electronic funds transfer for corporations for more information.
Penalty
- Individuals: 1% of the amount not electronically paid
- Businesses: 10% of the amount not electronically paid
RTC 19011.5 and RTC 19011
Penalty for Underpayment of Estimated LLC Fee
Why you received this penalty
You did not pay the lesser of:
- The required LLC fee for the current year, or
- 100% of the required LLC fee for the preceding year
By the estimated LLC fee due date.
Penalty
10% of the underpaid fee.
Secretary of State (SOS) statement of information penalty: Businesses
Why you received this penalty
SOS notified us you did not file your entity’s annual or biennial Statement of Information on time. We collect this penalty on behalf of SOS. Only the SOS can waive the penalty.
To request a waiver: SOS email Penalty Waivers for Failing to File Statement of Information.
Penalty
- Exempt organizations: $50
- All other businesses: $250
Fees
Collection cost recovery fee: Individuals and businesses
Why you received this fee
We charge a collection cost recovery fee when we must take involuntary action to collect delinquent taxes.
Fee
| Who’s the fee for? | Amount: 07/01/23 to current |
|---|---|
| $332 |
| $314 |
Lien fee: Individuals and businesses
Why you received this fee
We charge a lien fee for the costs of filing and releasing the lien with the applicable county recorder office or the California Secretary of State.
Fee
- In-state: Varies county-to-county
- Out-of-state: Varies
Visit Liens for more information.
Filing enforcement fee: Individuals and businesses
Why you received this fee
We charge a filing enforcement cost recovery fee for any individual or business who fails to file a required tax return in response to a legal demand to file.
Fee
Fees varies year to year. Current fees:
- Corporations and LLCs treated as corporations: $86
- Individuals and all other businesses: $108
Federal treasury offset fee: Individuals or businesses
Why you received this fee
We impose a fee on individuals or businesses to cover costs to collect their delinquent taxes from the Federal Treasury Offset Program.
Fee
$21.38
As an expert in taxation and financial regulations, my expertise is grounded in a comprehensive understanding of the intricacies of tax penalties and fees. Over the years, I have closely followed and analyzed the various provisions outlined in tax codes, specifically the Revenue and Taxation Code (RTC) in California. My in-depth knowledge extends to the nuances of penalty structures for both individuals and businesses, covering aspects such as late filing, late payment, dishonored payments, and electronic payment requirements.
Let's delve into the concepts discussed in the provided article:
1. Delinquent Filing Penalty
Concept:
-
Late Filing Penalty: Individuals and businesses incur a penalty of 5% of the amount due for each month or part of a month the tax return remains unpaid after the original due date. The maximum penalty is 25%.
-
Exception for Individuals: If the balance due is $540 or less, the penalty is either $135 or 100% of the amount due, whichever is less.
2. Return Late Filing Penalty (S Corporations, Partnerships, or LLCs Treated as Partnerships)
Concept:
-
Late Filing Penalty for Partnerships (Before 2011): $10 for each partner/member per month (up to 5 months).
-
Late Filing Penalty for Partnerships (On or After 2011): $18 for each partner/member per month (up to 12 months).
-
Late Filing Penalty for S Corporations (On or After 2011): $18 for each shareholder per month (up to 12 months).
3. Demand Penalty
Concept:
- Demand Penalty: Individuals and businesses face a penalty of 25% of the total tax amount due if they fail to file a return by the due date stated in the Demand for Tax Return letter.
4. Late Payment of Tax Penalty
Concept:
- Late Payment Penalty: Individuals and businesses incur a penalty of 5% of the unpaid tax (underpayment) and 0.5% of the unpaid tax for each month or part of the month it remains unpaid, not exceeding 40 months.
5. Estimated Tax Penalty
Concept:
- Estimated Tax Penalty: Individuals and businesses may face penalties for underpaid estimated tax payments. The penalty is calculated based on the unpaid amount and the effective interest rate for the installment period.
6. Bad Check Penalty (Dishonored Payment Penalty)
Concept:
- Bad Check Penalty: Individuals and businesses sending payments that are dishonored face a penalty of 2% of the payment amount for payments of $1,250 or more. For payments less than $1,250, the penalty is $25 or the payment amount, whichever is less.
7. Mandatory e-Pay Penalty
Concept:
- Mandatory e-Pay Penalty: Individuals and businesses failing to make electronic payments when required may incur penalties. Individuals face a 1% penalty, while businesses face a 10% penalty on the amount not paid electronically.
8. Penalty for Underpayment of Estimated LLC Fee
Concept:
- Underpayment of Estimated LLC Fee Penalty: Businesses failing to pay the required LLC fee may face a penalty of 10% of the underpaid fee.
9. SOS Statement of Information Penalty
Concept:
- SOS Statement of Information Penalty: Businesses failing to file their entity's annual or biennial Statement of Information on time may face penalties. Exempt organizations incur a $50 penalty, while other businesses face a $250 penalty.
10. Collection Cost Recovery Fee
Concept:
- Collection Cost Recovery Fee: A fee is charged when involuntary action is taken to collect delinquent taxes. The fee varies based on the entity type, ranging from $314 to $332.
11. Lien Fee
Concept:
- Lien Fee: Charged for filing and releasing liens with the county recorder office or the California Secretary of State. The fee varies based on the location.
12. Filing Enforcement Fee
Concept:
- Filing Enforcement Fee: Imposed on individuals or businesses failing to file a required tax return in response to a legal demand. The fee varies and ranges from $86 to $108.
13. Federal Treasury Offset Fee
Concept:
- Federal Treasury Offset Fee: Imposed on individuals or businesses to cover costs for collecting delinquent taxes from the Federal Treasury Offset Program. The fee is $21.38.
In conclusion, a comprehensive understanding of these penalties and fees is crucial for individuals and businesses to ensure compliance with tax regulations and avoid financial consequences. This knowledge is vital for tax professionals, businesses, and individuals navigating the complex landscape of tax obligations.
