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Interest and penalties

Interest

We will charge interest on income, sales, or use tax that is not paid on or before the due date of your return, even if you received an extension of time to file your return.

  • Interest is a charge for the use of money and in most cases may not be waived.
  • Interest is compounded daily and the rate is adjusted quarterly.

Penalty for late filing

If you file late we will charge a penalty, unless you have a valid extension of time to file.

The penalty charge is:

  • 5% of the income tax due for each month (or part of a month) the return is late, up to a maximum of 25%
  • If your return is more than 60 days late, your minimum penalty is the lesser of $100 or the total amount due on the return

Penalty for late payment

If you do not pay your income tax when due, we will charge you a penalty in addition to interest. The penalty may be waived if you can show reasonable cause for paying late.

The penalty charge is:

  • 0.5% of the unpaid amount for each month (or part of a month) it is not paid, up to a maximum of 25%

Penalty for incorrect calculation of tax

If the income tax you report on your return is less than the correct tax by more than 10% or $2,000, whichever is greater, you may have to pay a penalty.

The penalty charge is:

  • 10% of the difference between the income tax you reported and the income tax you actually owe

Penalty for negligence, fraudulent and frivolous returns

Negligence penalty - If you underreport income tax on your return due to negligence but not with intent to defraud, we will charge

  • a penalty of 5% of the difference between the correct income tax and the income tax shown on your return
  • 50% of the interest due on any underpayment resulting from negligence

Fraudulent returns - If any part of a deficiency is due to fraud, we will charge

  • a penalty of two times the amount of the difference between the correct income tax and the income tax shown on your return

Frivolous returns - If you file a frivolous income tax return we will charge a penalty of up to $5,000 in addition to any other penalty. Frivolous returns include returns that:

  • do not contain information needed to judge the correctness of the income tax return
  • report obviously and substantially incorrect information
  • intend to delay or impede the administration of Article 22 of the Tax Law or the processing of the return

Penalty for underpaying your estimated tax

We may charge you a penalty on the amount of estimated income tax that you did not pay or paid late during the year (either through estimated tax payments, withholding tax, or a combination of the two). The penalty you will have to pay will equal the federal short-term interest rate plus five and one half percentage points (adjusted quarterly), but not less than 7.5%.

The underpayment penalty applies if your 2013 withholding and estimated income tax payments do not equal:

  • 90% of the income tax shown on your 2013 return
  • 100% of the income tax shown on your 2012 tax return if your NYS AGI is $150,000 or less
  • 100% of the income tax shown on your 2012 return if married filing separately for 2013 and your NYS AGI is $75,000 or less
  • 110% of the income tax shown on your 2012 return if your NYS AGI is more than $150,000, or
  • 110% of the income tax shown on your 2012 return if married filing separately for 2013 and your NYS AGI is more than $75,000

Note: Special rules apply to farmers and fishermen. See Form IT-2105.9-I. Instructions for Form IT-2105.9, Underpayment of Estimated Tax by Individuals and Fiduciaries.

If you determine that you underpaid or paid your estimated tax late, you must calculate the amount of your penalty using Form IT-2105.9, Underpayment of Estimated Income Tax by Individuals and Fiduciaries. Submit Form IT-2105.9 with your return.

Updated: December 19, 2013