Alabama imposes penalties and interest on taxpayers who fail to file or pay their state income tax on time. Interest is charged on any unpaid tax from the due date of the federal return until the date of payment, even if an extension is granted. The interest rate is the same as that prescribed by the Internal Revenue Service (IRS) at the time the return is filed. Taxpayers can obtain the current interest rate by contacting any Alabama Taxpayer Service Center.
Penalties for Late Filing
A penalty is imposed when a return is not filed by the due date.
- The late filing penalty is 10% of the tax due or $50, whichever is greater.
- The minimum $50 penalty applies only when there is a tax liability.
- No late filing penalty is imposed if there is no tax due or if the return results in a refund.
Penalties for Late Payment
A penalty is imposed when tax is not paid by the due date.
- The late payment penalty is 1% of the unpaid tax per month or fraction of a month that the tax remains unpaid.
- The total late payment penalty is limited to a maximum of 25% of the unpaid tax.
- This penalty applies in addition to any interest charges on unpaid tax.
Consequences of Non-Payment
- If a return is filed without full payment of the tax due, the Alabama Department of Revenue may issue a proposed or final assessment for the unpaid liability, including tax, penalties, and interest.
- A final assessment that is not timely appealed becomes final and legally enforceable.
- A final assessment has the same effect as a judgment of a circuit court.
- The Department is authorized to collect delinquent tax through enforcement actions including tax liens, wage garnishment, bank levies, and seizure of property through legal process, as provided under Alabama law and the procedures outlined in Title 40 of the Code of Alabama 1975.
Source:
Form 40NR.pdf
Form 40.pdf
Disclaimer: Always verify details with the most current Federal or State Department of Revenue Forms and Instructions. For complex tax situations, consult a CPA or tax attorney.