Utah Income Tax Penalties and Interest


Penalties

Utah Code §59-1-401 authorizes the Tax Commission to assess the following penalties on individual income tax:

Penalties are separated by tax type and the date returns are filed or payments are made. Penalties are assessed as follows:

Days Late Penalty
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

Late Filing Penalty

If a tax-due return is not filed by the original due date, or by the extension period due date, a late filing penalty will be assessed.

Late Payment Penalty

All tax, penalty and interest due must be paid when a return is filed. If they are not paid by the original due date, a late-payment penalty will be assessed.

If the late-filing penalty has been assessed, the late-payment penalty will not be assessed until 91 days after the due date of the return. If the return is not filed within the 90 days, both the late-filing penalty and the late-payment penalty will be assessed.

Extension Penalty

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 make the required prepayment by the original return due date.

Your prepaid credits (withholding tax, pre-payments, credits, etc.) must equal at least:

  1. 90% of the current year tax liability,
  2. 100% of the previous year tax liability, or
  3. 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 2% per month, calculated on a daily basis, until the date the return is filed. The penalty calculation is:

(unpaid tax) x 0.24 x (number of days) ÷ 365

Notes on Penalties

  1. If you file during the extension period, you must still pay any tax due by the original due date. Interest is assessed on any unpaid tax, from the original due date of the return until the date the tax is paid.
  2. If you file during the extension period, you must pay any extension penalty and interest  when you file the return. If you do not, you will be assessed a failure-to-pay penalty.
  3. You do not need to make a prepayment if you had no tax liability on your previous year’s return. If you did not file a return the previous year, you must prepary 90% of the current year’s tax liability.
  4. There is no late-filing penalty (including on an amended return) if you have no tax due on the return.

Additional Penalties

The following penalties may apply due to audit findings:

  1. If underpayment of tax is due to negligence, the penalty is 10% of the underpayment.
  2. If underpayment is due to intentional disregard of law or rule, the penalty is 15% of the underpayment.
  3. If underpayment results from intent to evade the tax, the penalty is the greater of $500 per period or 50% of the underpayment.
  4. 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 Pub 58, Utah Interest and Penalties for more information, including penalties for other taxes.

Failure to File Information Returns or Supporting Schedules

If you fail to file an information return, complete a required supporting schedule, or use an approved form, the penalty is $50 for each return or schedule up to a maximum of $1,000.

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Interest

Utah Code §59-1-402 authorizes the Tax Commission to assess interest. Interest applies to underpayments, deficiencies, and delinquencies.

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Interest Rates

For calendar year 2017 (Jan. 1, 2017 – Dec. 31, 2017), the interest rate is 3 percent.

Interest is calculated from the original due date of the return until the tax liability is paid in full. 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.

Use the online Penalty and Interest Calculator or follow the instructions in Pub 58, Utah Interest and Penalties. Pub 58 also has interest rates for previous years.

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