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Interest and penalties


Interest

We will charge interest on tax (including sales and 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 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 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 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 tax you reported and the tax you actually owe

Penalty for negligence, fraudulent and frivolous returns

Negligence penalty - If you underreport 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 tax and the 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 tax and the 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 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 2015 withholding and estimated tax payments do not equal:

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 Tax by Individuals and Fiduciaries. Submit Form IT-2105.9 with your return.

Updated: December 15, 2015