SECURE Act: Increase in Penalty for Failure to File (Section 402)

The Setting Every Community Up for Retirement Enhancement Act of 2019 (SECURE Act) contains a provision that increases penalties for failure to file federal tax returns in a timely manner. The change applies to returns that are due beginning in 2020, including any extensions, which means these enhanced penalty amounts apply to 2019 returns.

Under prior law, the penalty for filing a late federal tax return was the lesser of 5% of the unpaid taxes or $330 for each month the tax return was late, subject to a total cap of 25% of the unpaid taxes. With Section 402 of the SECURE Act, the minimum monthly penalty increases to the lesser of 5% of the unpaid taxes or $435, subject to adjustment for inflation in future years.

Added to the SECURE Act as a revenue raiser, this provision will not be welcomed by taxpayers. Fortunately, the change impacts only the minimum monthly penalty for late filing and not the aggregate cap of 25% of any taxes due.

Interested in learning more about the SECURE Act? Download the SECURE Act eBook from the Schneider Downs Retirement Solutions team for a full overview of provisions and highlights at www.schneiderdowns.com/secure-act-ebook.

 

Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice.

You’ve heard our thoughts… We’d like to hear yours

The Schneider Downs Our Thoughts On blog exists to create a dialogue on issues that are important to organizations and individuals. While we enjoy sharing our ideas and insights, we’re especially interested in what you may have to say. If you have a question or a comment about this article – or any article from the Our Thoughts On blog – we hope you’ll share it with us. After all, a dialogue is an exchange of ideas, and we’d like to hear from you. Email us at [email protected].

Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax, or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice.

© 2023 Schneider Downs. All rights-reserved. All content on this site is property of Schneider Downs unless otherwise noted and should not be used without written permission.

our thoughts on
2024 Cost-of-Living Adjustments for Retirement Plans and IRAs
Incentive Compensation for Construction Industry Employers
How Safe Are Your 401(k) Assets?
SECURE 2.0 Act – Section 334. Long-term Care Contracts Purchased with Retirement Plan Distributions
SECURE 2.0 Act – Section 348.Cash Balance
SECURE 2.0 Act – Section 312. Employer May Rely On Employee Certifying That Deemed Hardship Distribution Conditions Are Met
Register to receive our weekly newsletter with our most recent columns and insights.
Have a question? Ask us!

We’d love to hear from you. Drop us a note, and we’ll respond to you as quickly as possible.

Ask us
contact us
Pittsburgh

This site uses cookies to ensure that we give you the best user experience. Cookies assist in navigation, analyzing traffic and in our marketing efforts as described in our Privacy Policy.

×