One of the most costly penalties is the Failure to file penalty but it is the most evitable penalty also. The failure to file penalty is assessed whenever taxpayers fail to file their taxes by the due date or extension deadline; accruing at 5% per month. In a short five month period, the failure to file penalty easily peaks at a whopping 25% of taxes owed. This is why I always adjure taxpayers to file their taxes on time even if they may have a tax balance due. If a tax balance is due today, it will be due tomorrow, or whenever that tax return is eventually filed. Now, let’s take a look at a few additional penalties and associated interest that are now compounded on top of an unnecessary failure to file penalty.