When it comes to tax filing, the IRS is extremely strict about timeliness. If you file even a day later, you could end up paying the price for it. And considering the steep fines that they impose, we recommend you always file your tax on time.
The penalty for not filing 2290 tax forms on time is 4.5% of the unpaid taxes for each month; or part of a month that a tax return is late. Penalty will start accruing a day after the tax filing due date and will not exceed 25% of your unpaid taxes.
A failure-to-file penalty may apply if you did not file Form 2290 by the tax filing deadline.
The failure-to-file penalty is 5% of your balance due for every month (or part of a month) in which your taxes go unpaid.
You will not have to pay a late-filing penalty if you can show a reasonable cause for not filing
Calculating the late filing penalty
The penalty for late filing of IRS Form 2290 after August 31st is equal to 4.5% of total tax due, assessed on a monthly basis up to 5 months.
For example, Bob had to pay an HVUT tax of $250. But he failed to file him form 2290 and pay his HVUT tax by August. Bob’s penalty would be: $250 x 4.5% = $11.25. And his total tax due with the penalty will be $261.25
Late filers will also face an additional monthly penalty of 0.5% on top of total tax due and an additional interest of 0.54% per month will also accrue. Therefore, if you do not file your 2290 return on time, you will be liable to pay taxes with penalty and interest, which costs you around 5% of your total tax due.
It is advisable to file your tax return on time to stay on the safe side of IRS audits. Additionally, some states will suspend vehicle registration if a proof of HVUT payment is not produced. An IRS stamped Form Schedule 1 will only be issued to those who have filed their Form 2290.