Penalty Exception Provisions

Our Department may assess penalty on the following tax types:

The penalty — except penalty for willfully failing to file or willfully filing a false return or deposit — cannot be imposed if the circumstances described in this brochure occur. Some of these exceptions may require proof to support your position that penalty should not be imposed.

Four Types of Penalty

Four types of penalty may be applied to taxes due. In situations where more than one type of penalty applies, the highest percentage penalty is the only one charged

  1. Failure to timely file a return or deposit: 10%
  2. Failure to timely pay the tax due on the return or deposit form: 5%
  3. Audit deficiencies when the Department determines additional tax is due: 5%
  4. Willful failure to file a return or deposit with intent to evade tax: 75% (There are no exceptions to this penalty.)

Penalty Exceptions

Penalty may not be imposed in the following circumstances. The number(s) following each reason indicates which of the three penalties will not be imposed.

* A taxpayer involved with a self-audit program will receive forms from the Department that will identify the audit as a self-audit program. The specific years will be identified. Any returns voluntarily filed that are not part of the self audit program do not qualify for a waiver of penalty for this exception.

To request a waiver of penalty for Sales, Retailers Use, Consumer’s Use, Withholding, Cigarette/Tobacco, & Motor Fuel, you may use the Penalty Waiver Request form.    

Inheritance Tax Exceptions

Effective for estates with disclaimers filed on or after July 1, 2007, the 10 percent late-filing penalty or the 5 percent failure-to-pay penalty can be waived if the sole reason is a beneficiary’s decision to disclaim property or disclaim an interest in property from the estate.

However, for either penalty to be waived, the Iowa inheritance tax return must be filed and all tax must be paid within the later of nine months from the date of death or 60 days from the delivery or filing date of the disclaimer.

78-626 (12/02/09)
Iowa Department of Revenu