Penalties and Interest

Interest applies to overdue tax from the original due date of the return until you pay the tax. See interest rates for recent years. 

Penalties are assessed for late returns, late payments, or both. The law determines calculations, and they differ by tax type.

It’s important that you get in touch with us if you’ve forgotten to file for one or more tax periods.

Penalty and interest
estimator

When penalty is due

According to Idaho Code section 63-3046, penalty is due if a taxpayer:

  • Files a return but the tax due isn’t paid (0.5%/month to a maximum of 25%)
  • Files a return and pays the tax due on or before the extended due date (2%/month from the original due date to the date of payment)
  • Doesn’t file a tax return on time (5%/month to a maximum of 25%)
  • Disregards rules without an intent to defraud (5%)
  • Substantially understates tax due (10%)
  • Files a false or fraudulent tax return (50%)

The minimum penalty is $10.

How income tax penalty is calculated

pdf How Your Income Tax Penalty Is Calculated

Extensions of time to file

Individuals, corporations, pass-through entities, and fiduciaries have an automatic six-month extension of time to file a tax return (Idaho code section 63-3033). However, this doesn’t apply to payments — payments are due in full on the return’s due date. Tax payment is due WHEN the return is filed, regardless of the extension.

What you don’t know about a “valid extension of time” for your individual income tax return can hurt you. Please read the Extension page for more information.

Extension payments

To avoid penalties your prepayments (e.g., withholding or payments applied from previous year refunds) must equal either 80% of the estimated tax due for your current return or 100% of the income tax reported on your return for the previous year. If your prepayments don’t meet that level, you can make a payment for the balance by the due date — either through TAP or by sending us your payment with the appropriate form:

  • Individuals can use the worksheet on Form 51.
  • Businesses can use the worksheet on Form 41ES.

Keep in mind:

  • If you filed a return the previous year and the “tax due” (immediately following the “Payments and Other Credits” section) was zero, you don’t need to make an extension payment. 
  • If you didn’t file the previous year, you must pay 80% of the current year’s liability. 
  • A penalty doesn’t apply if the necessary payment would be $50 or less.