Utah Code §59-1-401 authorizes the Tax Commission to assess the following penalties on individual income tax:
- Late filing penalty
- Late payment penalty
- Extension penalty
- Additional penalties
- Failure to file information returns or supporting schedules
Penalties are separated by tax type and the date returns are filed or payments are made. Penalties are assessed as follows:
|1-5 days||The greater of $20 or 2% of the unpaid tax|
|6-15 days||The greater of $20 or 5% of the unpaid tax|
|16 or more days||The greater of $20 or 10% of the unpaid tax|
If a tax due return is not filed by the due date, or within the extension period, a late filing penalty will be assessed.
When a return is filed, all tax, penalty and interest due must be paid. If they are not paid, a late payment penalty will be assessed. If the failure to file a tax due return penalty has been assessed, the failure to pay penalty will not be assessed until 91 days after the return due date of the return. If the return is not filed within the 90 days, both the failure to file tax due return and the failure to pay penalties will be assessed.
Utah automatically grants a six-month extension to file income tax returns (not an extension to pay tax due). However, you will receive an extension penalty if you do not meet the following prepayment conditions by the original return due date.
Prepaid credits (withholding tax, pre-payments, etc.) must equal:
- 90% of the current year tax liability,
- 100% of the previous year tax liability, or
- 90% of the current year tax liability if you did not file a return or had zero tax in the prior year.
The penalty on the unpaid tax is assessed at a rate of 2% per month, calculated on a daily basis, until the date the return is filed. For example:
(unpaid tax) x .24 x (number of days) / 365
- The extension to file still requires you to pay any tax due by the original due date. Interest is assessed on any unpaid tax, from the due date until the date the tax is paid.
- If you use an extension to file your return, you must pay any extension penalty and interest with the return. If you do not, you will be assessed a failure to pay penalty.
- No prepayment is required if you had no tax liability on your previous year's income tax return. If there is no previous year return, the requirement is 90% of the current year's tax liability.
The following penalties may apply due to findings during an audit:
- If underpayment of tax is due to negligence, the penalty is 10% of the underpayment.
- If underpayment is due to intentional disregard of law or rule, the penalty is 15% of the underpayment.
- If underpayment results from intent to evade the tax, the penalty is the greater of $500 per period or 50% of the underpayment.
- If the underpayment is due to fraud with intent to evade the tax, the penalty is the greater of $500 per period or 100% of the underpayment.
See Publication 58, Utah Interest and Penalties for more information, including penalties for other taxes.
If there is a failure to file an information return or a complete supporting schedule, the penalty is $50 for each return or schedule up to a maximum of $1,000.
Utah Code §59-1-402 authorizes the Tax Commission to assess interest. The interest rate for a calendar year of two percentage points above the federal short-term rate is calculated for underpayments, deficiencies, and delinquencies.
For calendar year 2011 (Jan. 1, 2011 - Dec. 31, 2011), the interest rate is 3 percent.
Interest is calculated from the original due date of the return until the tax is paid. Interest is calculated as follows:
interest = (unpaid tax) x (interest rate) x (number of days) ÷ 365
Note: Payments are applied first to penalties, then to interest, and last to the tax liability. See Rule R861-1A-18.
See Tax Commission Publication 58, Utah Interest and Penalties for more details and interest rates for previous years.