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Understanding non-payment or underpayment penalties

The tax code in the United States is extremely complex. People generally have only the basic understanding that they need to pay taxes, and going through the steps to file a return can be quite stressful, particularly if someone has multiple sources of income and/or a business.

The process of completing an accurate return can be overwhelmingly complicated. Therefore, it is quite common for someone to make a mistake. Whether this error is intentional or not, it can prompt an audit by the IRS and serious penalties for underpayment.

There are a few reasons people end up underpaying taxes. One way is if someone files a false return that does not accurately reflect tax obligations. Another way is by failing to complete a return at all. A third reason involves not paying enough throughout the year. Perhaps there was a miscalculation or insufficient payments withheld from income or those made through estimated taxes payments.

Whatever the reason, if a person has not paid enough taxes, he or she will be required to pay a penalty. The amount that must be paid depends on how much has been underpaid. There are ways to avoid this penalty, but these can also be difficult to understand and apply only in certain situations. 

Penalties of any tax offense could result in huge fines and even criminal charges. Rather than ignore the problem or take a chance on paying what you think you should pay, you may want to speak with an attorney who understands federal and Minnesota tax law. Having legal guidance can help you avoid costly mistakes and minimize the penalties you may be facing.

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