Revised January 1, 2008

Utah Tax Penalties and Interest

Penalties

Utah Code §59-1-401 is the authority for penalties assessed by the Tax Commission. Penalty calculations have changed for some taxes beginning in 2008.

There is a penalty for failure to file tax return (late filing penalty), a penalty for failure to pay tax due on return (late payment penalty), and a penalty for failure to file information returns or supporting schedules. Penalties are separated by tax type and the date returns are filed or payments are made.

  1. Failure to file a tax return (late filing penalty)
    If a tax due return is not filed by the due date, or within the extension period, a penalty will be assessed.
    1. Individual income tax, fiduciary tax, sales and use tax, sales related taxes, andwaste tire fee
      1. Prior to March 2008, the penalty is the greater of $20 or 10% of the unpaid tax, fee or charge on the return.
      2. After February 2008, the penalty is:
        1. If 1 through 5 days late, the greater of $20 or 2% of the unpaid tax, fee or charge on the return.
        2. If 6 through 15 days late, the greater of $20 or 5% of the unpaid tax, fee or charge on the return.
        3. If 16 days or more late, the greater of $20 or 10% of the unpaid tax, fee or charge on the return.
    2. Corporate franchise or income tax, partnership tax, withholding income tax, and mineral production withholding tax
      1. Prior to May 2009, the penalty is the greater of $20 or 10% of the unpaid tax, fee or charge on the return.
      2. After April 2009, the penalty is:
        1. If 1 through 5 days late, the greater of $20 or 2% of the unpaid tax, fee or charge on the return.
        2. If 6 through 15 days late, the greater of $20 or 5% of the unpaid tax, fee or charge on the return.
        3. If 16 days or more late, the greater of $20 or 10% of the unpaid tax, fee or charge on the return.
    3. For more information, including penalties for other taxes, see Publication 58, Utah Interest and Penalties.
  2. Failure to pay (late payment penalty)
    When a return is filed, all tax, penalty and interest due must be paid. If they are not paid, a penalty will be assessed. If the failure to file a tax due return penalty has been assessed, the failure to pay penalty will not be assessed until 91 days after the due date of the return. If the return is not filed within the 90 days, both the failure to file tax due return and the failure to pay penalties will be assessed upon filing.
    1. Individual income tax, fiduciary tax, sales and use tax, sales related taxes, andwaste tire fee
      1. Prior to March 2008, the penalty is the greater of $20 or 10% of the unpaid tax, fee or charge on the return.
      2. After February 2008, the penalty is:
        1. If 1 through 5 days late, the greater of $20 or 2% of the unpaid tax, fee or charge on the return.
        2. If 6 through 15 days late, the greater of $20 or 5% of the unpaid tax, fee or charge on the return.
        3. If 16 days or more late, the greater of $20 or 10% of the unpaid tax, fee or charge on the return.
    2. Corporate franchise or income tax, partnership tax, withholding income tax, and mineral production withholding tax
      1. Prior to May 2009, the penalty is the greater of $20 or 10% of the unpaid tax, fee or charge on the return.
      2. After April 2009, the penalty is:
        1. If 1 through 5 days late, the greater of $20 or 2% of the unpaid tax, fee or charge on the return.
        2. If 6 through 15 days late, the greater of $20 or 5% of the unpaid tax, fee or charge on the return.
        3. If 16 days or more late, the greater of $20 or 10% of the unpaid tax, fee or charge on the return.
    3. For more information, including penalties for other taxes, see Publication 58, Utah Interest and Penalties.
  3. Failure to make sufficient prepayment (extension penalty)

A six-month extension to file a return is automatically granted for income tax returns. However, if the prepayment conditions below are not met by the original due date of the return, an extension penalty will be added.

Prepaid credits must equal:

  1. 90% of the current year tax liability, or
  2. 100% of the previous year tax liability.

The penalty on the unpaid tax will be assessed at a rate of 2% per month, calculated on a daily basis, until the date the return is filed.

(unpaid tax) x .24 x (number of days) / 365

Additional Notes

  1. The extension to file does not change the requirement to pay any tax due by the original due date. Interest will be assessed on any unpaid tax, from the due date until the date the tax is paid.
  2. If you use an extension to file your return, any extension penalty and interest must be paid with the return. Failure to make this payment will result in a failure to pay penalty being assessed.
  3. If the previous year income tax return was filed and the tax was zero, no prepayment is required. If there is no previous year return, the required prepayment is 90% of the current year's tax liability.
  1. Additional penalties
    The following additional penalties may apply due to findings during an audit:
    1. If underpayment of tax is due to negligence, the penalty is 10% of the underpayment.
    2. If underpayment is due to intentional disregard of law or rule, the penalty is 15% of the underpayment.
    3. If underpayment results from intent to evade the tax, the penalty is the greater of $500 per period or 100% of the underpayment.
    4. If the underpayment is due to fraud with intent to evade the tax, the penalty is the greater of $500 per period or 100% of the underpayment.

See Tax Commission Publication 58, Interest and Penalties, for more details.

Interest

Utah Code §59-1-402 is the authority for interest assessed by the Tax Commission. Unless otherwise provided by law, the interest rate for a calendar year is calculated based on the federal short-term rate in effect for the fourth quarter of the preceding calendar year. A simple interest rate of two percentage points above the federal short-term rate is used to calculate interest for underpayments, deficiencies, and delinquencies.

Interest Rates

For calendar year 2008 (Jan. 1, 2008 - Dec. 31, 2008), the interest rate is 7 percent.

Interest is calculated using the number of calendar days from the original due date of the return until the tax is paid. Interest can be calculated using this formula:

interest = (unpaid tax) x (interest rate) x (number of days) ÷ 365

Note: Payments are applied first to penalties, then to interest, and last to the tax liability. See Rule R861-1A-18.

See Tax Commission Publication 58, Interest and Penalties for more details and interest rates for previous years.

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