── ── Tax & compliance
What Missing a Filing Actually Costs: Penalty Exposure by Form
August 13, 2026 · 8 min read · By Brad Ju
Late-filing penalties are not one number — they are a dozen different statutory formulas. Per-partner-per-month on a 1065, per-form on a 1099, a percentage of unpaid tax on a 1040, and a flat five-figure amount on a 5472. This is the exposure for each, with the statute behind it, for 2025 tax-year returns filed in 2026.
"File on time or there's a penalty" is where most explanations stop, and it's why the urgency never lands. The penalties differ by an order of magnitude between forms, and the ones that hurt most are rarely the ones people worry about. A late 1040 with no balance due costs nothing. A late 5472 costs $25,000 and keeps climbing with no ceiling. Below is the exposure for each common filing, with the statute you can trace it back to.
Dollar figures are the inflation-adjusted amounts for 2025 tax-year returns (filed in 2026), set by Rev. Proc. 2024-40. These are exposure figures — what the statute says the cost is — not predictions of what will be assessed after abatement or reasonable cause.
Federal returns
| Form | Penalty | Statute | Cap |
|---|---|---|---|
| 1065 (partnership) | $255 per partner, per month late | IRC §6698 | 12 months |
| 1120-S (S-corp) | $255 per shareholder, per month late | IRC §6699 | 12 months |
| 1040 / 1120 | 5% of unpaid tax per month; drops to 4.5% while a separate 0.5%/month failure-to-pay runs | IRC §6651(a)(1), (a)(2), (c)(1) | 25% each — up to 47.5% combined, before interest under §6601 |
| 1040 / 1120, over 60 days late | Minimum penalty: the lesser of $525 or 100% of the tax owed | IRC §6651(a) | — |
| 941 (payroll) | 5% of unpaid tax per month, plus deposit penalties of 2–15% depending on lateness | IRC §6651, §6656 | 25% on the late-filing piece |
| 940 (FUTA) | 5% of unpaid tax per month, plus late-deposit penalties | IRC §6651 | 25% |
| Estimated tax (1040-ES) | Interest at the federal underpayment rate — short-term rate plus 3 points, reset quarterly | IRC §6621 | Runs until paid |
Two things in that table are widely misread. First, the per-partner penalties compound with headcount: a six-partner partnership four months late is $255 × 6 × 4 = $6,120, on a return that may have shown no tax due at all. Second, the 1040/1120 penalty is a percentage of unpaid tax — no balance due means no failure-to-file penalty. The minimum penalty after 60 days only applies when tax is owed.
And the estimated tax line is the one that catches business owners who think of tax as an April event: interest runs on each quarter's shortfall from that quarter's own due date. Paying in full at year-end does not erase it.
Information returns
| Form | Penalty | Statute | Note |
|---|---|---|---|
| W-2 / W-3 | $340 per form not filed by August 1 | IRC §6721 | The unfurnished employee copy is penalized separately under §6722 — which doubles it |
| 1099-NEC | $340 per form not filed by August 1 | IRC §6721 | Same §6722 doubling; missing W-9s can also force backup withholding |
| 8027 (tipped establishments) | $340 per report | IRC §6721 | One report per establishment — two locations doubles it |
Per-form penalties look small and scale badly. Forty contractors, unfiled past August 1, is $13,600 before the payee-copy penalty doubles it. Earlier tiers are lower — the amounts step up the longer the filing is outstanding — so the table above is the top tier, which is where the exposure lands if nothing is done.
International — where the numbers change scale
| Form | Penalty | Statute | Continuation |
|---|---|---|---|
| FinCEN 114 (FBAR) | Up to $16,536 per unfiled report, non-willful | 31 U.S.C. §5321 | Per report, not per account, since Bittner v. United States (2023). Willful penalties are far higher. |
| 8938 | $10,000 flat | IRC §6038D | +$10,000 per 30 days after IRS notice, up to $50,000 more — and the return's statute of limitations stays open |
| 5471 | $10,000 per form, per year | IRC §6038 | Up to $50,000 more after IRS notice |
| 5472 | $25,000 per form, per year | IRC §6038A(d) | A further $25,000 per 30 days if unfiled 90 days after notice — with no ceiling |
| 3520 | 5% of the unreported amount per month, up to 25%, with a $10,000 floor | IRC §6039F / §6677 | Among the harshest in the code |
Form 5472 deserves special attention because of who owes it: a foreign-owned single-member LLC — the standard structure for an overseas seller entering the US market — must file a pro forma 1120 with a 5472 attached even with no US tax due. Owners routinely don't know the obligation exists, and it is the single most expensive miss in that group.
Plans and state filings
| Filing | Penalty | Statute |
|---|---|---|
| Form 5500 | $250 per day, up to $150,000 — the Department of Labor can assess separately on top | IRC §6652(e) |
| CA Form 568 (LLC) | The $800 annual tax is owed regardless, plus $18 per member per month, capped at 12 months, plus penalties on unpaid tax | Cal. R&TC §19172 |
| CA Form 100S | $800 minimum franchise tax owed regardless, plus 5% of unpaid tax per month up to 25% | Cal. R&TC §19131 |
| TX franchise report | $50 flat plus 5% of tax due (10% if more than 30 days late) — and the entity loses good standing | Tex. Tax Code §171.362 |
| DE franchise (corp) | $200 flat plus 1.5% monthly interest; the charter goes void after prolonged non-payment | 8 Del. C. §502 |
| FL annual report | $400 flat late fee with no waiver, and administrative dissolution by late September | Fla. Stat. §605.0212 |
What is deliberately not on this list
Beneficial ownership reporting, gift tax returns, and general state annual reports are missing on purpose. BOI's legal status has moved repeatedly; state annual report penalties vary by state and entity form; a Form 709 exposure depends on facts a table can't hold. Publishing a number for those would mean publishing a guess dressed as a citation, and a wrong penalty figure destroys more trust than a blank does.
The same discipline applies to headcount. If nobody has confirmed how many partners or how many 1099s are involved, the honest move is to compute at one unit and label it as a floor, not to estimate. A figure computed at one head that gets read as a total is exactly the kind of error a reviewer catches once and then never trusts the tool again.
How deciqAI handles it
The obligation radar computes penalty exposure per filing from these statutory formulas — never from a model — carries the inflation-adjustment year with every figure, marks any amount computed at a single unit as a floor, and returns nothing at all where the law is unsettled. Educational content — not tax advice; abatement and reasonable cause are professional judgments.
FAQ
What is the penalty for filing Form 1065 late?
$255 per partner, per month late, for up to 12 months, under IRC §6698 (2025 tax-year returns, per Rev. Proc. 2024-40). It applies even when the partnership owes no tax, and it scales with the number of partners — six partners four months late is $6,120.
Is there a penalty for filing a 1040 late if I don't owe anything?
No. The failure-to-file penalty under IRC §6651(a)(1) is a percentage of unpaid tax, so with no balance due there is nothing to compute it on. The minimum penalty for returns more than 60 days late — the lesser of $525 or 100% of the tax — only applies when tax is owed.
How much are late 1099-NEC penalties?
$340 per form for filings still outstanding after August 1 (IRC §6721), with earlier tiers costing less. The unfurnished recipient copy is penalized separately under §6722, which effectively doubles the exposure per form.
What is the penalty for not filing Form 5472?
$25,000 per form, per year, under IRC §6038A(d) — and another $25,000 for each 30 days it remains unfiled 90 days after IRS notice, with no ceiling. It applies to foreign-owned single-member LLCs even when no US tax is due.
Is the FBAR penalty charged per account or per report?
Per report. Since the Supreme Court's Bittner decision in 2023, the non-willful penalty applies to the unfiled report rather than to each account it should have listed — up to $16,536 as inflation-adjusted. Willful penalties are far higher and carry criminal exposure.
Does paying estimated taxes in full at year end avoid the penalty?
No. Underpayment interest under IRC §6621 runs on each quarter's shortfall from that quarter's own due date, at the federal short-term rate plus 3 points, reset quarterly. Catching up in December does not undo interest that already accrued from April.
Can late-filing penalties be abated?
Often, through first-time abatement or reasonable cause — but that's a professional judgment about specific facts, not something a table can answer. The figures here are statutory exposure, which is the starting point for that conversation, not the ending.