Many tax penalties are substantial and can dramatically increase a tax bill. Penalties can be assessed for a variety of reasons. Some may result from a taxpayer’s carelessness or inattention to tax details. Other penalties are incurred due to the overstatement of deductions, the failure to report income, missing documentation, negligence or procrastination. Taxpayers may also be penalized for intentional acts of fraud and/or filing frivolous tax returns.
The following is an overview of the federal penalties that can be imposed on a taxpayer.
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