Individual Tax Problems  >  State Penalties


When you owe back taxes, state issued tax penalties can quickly become a reality. Each state across the country has its own unique laws pertaining to how it imposes tax penalties. These penalties can be quite a shock as they add up quickly – they can even double your tax bill over time.

Let’s examine how state tax penalties work and what can be done to resolve them.


All states have their own rules as to how they’ll assess and apply penalties. However, states typically have tax penalty types that overlap and are consistently applied to tax debt regardless of what state you reside in.

The most common types of state tax penalties that we’ve helped our clients with are:

  1. Failure-to-file or late-filing penalties – Every state has specific dates for when returns are due. If you don’t file your returns on time, the state Taxing Authorities will assess a penalty. Typically there is a cap on how much of a fee the state can apply.
  2. Failure-to-pay penalties – If you file a tax return with a balance due, and you don’t pay the balance in full, the state will impose a penalty on top of your tax bill. Each state has a different calculation, but these types of penalties are typically aggressive and continue to grow over time.

In both situations, the taxpayer may have to propose an Installment Agreement to get current.


Most states have provisions in their policies that allow for the penalties to be waived based on reasonable cause. It’s important to note that what you consider to be reasonable may not fit the definition of what your state has determined to be reasonable. State Taxing Authorities will not grant a penalty waiver or abatement if they think you were willfully neglectful in either not filing or not paying your taxes.

Every state is different. Some states have a formal process with assigned forms for penalty waivers. Others require a written outline of your situation as well as an argument stating a reasonable cause to waive the penalties. Supporting documentation can also be of great assistance in getting penalties removed.

To read more about the possibility of an Installment Agreement as a resolution option, download our free guide.

It is in your best interest to begin your resolution as soon as possible, otherwise you are sure to face bigger penalty fees down the line. Remember, you can speak with a tax expert about your state tax penalty situation at any time.

Start your resolution today so you can stop worrying and get back to living your life.
Speak with a tax expert today about your state tax penalties and your options.