When a tax return is filed after the due date or the tax due is paid late, penalty and interest charges may be assessed as follows:
Late Filing Penalty
The late filing penalty is 5% of the tax due for each month (or part of a month) the return is late. The maximum penalty for late filing is 25% of the balance due. The Division also may charge a penalty of $100 for each month the return is late.
Late Payment Penalty
A late payment penalty of 5% of the tax due also may be charged.
The annual interest rate is 3% above the prime rate for every month (or part of a month) the tax is unpaid, compounded annually. At the end of each calendar year, any tax, penalties, and interest remaining due (unpaid) will become part of the balance on which interest is charged. For information on interest rates, see Technical Bulletin TB-21(R).
In addition, if your tax bill is sent to our collection agency, a referral cost recovery fee of 10.7% of the tax due will be added to your liability. If a certificate of debt is issued for your outstanding liability, a fee for the cost of collection of the tax also may be imposed.
If you can show reasonable cause for failing to file a return or pay any tax when due, we may waive part or all of a penalty.