How does NY State calculate late filing penalties?
According to the NY Department of Finance, if a corporation does not pay the NY corporation tax due on or before the original due date, that corporation must “pay interest on the amount of the underpayment from the original due date of the tax return (without regard to any extension of time for filing) to the date the tax is paid.” Further, the NY Department of Finance has stated that “Interest is always due, without any exceptions, on any underpayment of tax.”
An extension of time for filing does not extend the due date for payment of tax. If a corporation files and pays its taxes after the due date, than that corporation must compute additional charges for late filing and late payment on the amount of tax minus any payment made on or before the due date (with regard to any extension of time for filing).
The following represent the 4 possible scenarios whereby the NY Department of Finance assesses the late filing penalties to corporations whose tax returns are filed late or have made late payments of their tax liabilities.
A. If a corporation does not file a return when due, or if the request for extension is invalid, add to the tax 5% per month up to 25% (section 1085(a)(1)(A)).
B. If a corporation does not file a return within 60 days of the due date, the additional charge in item A above cannot be less than the smaller of $100 or 100% of the amount required to be shown as tax (section 1085 (a)(1)(B)).
C. If a corporation does not pay the tax shown on a return when due, add to the tax ½% per month up to a total of 25% (section 1085 (a)(2)).
D. The total of the additional charges in items A and C may not exceed 5% for any one month, except as provided for in item B above (section 1085 (a)).