Interest — Instruction 1041-N — Instructions for Form

Interest is charged on taxes not paid by the due date, even if an extension of time to file is granted. Interest is also charged on the failure-to-file penalty, the accuracy-related penalty, and the fraud penalty. The interest charge is figured at a rate determined under section 6621.

Late Filing of Return The law provides a penalty of 5% of the tax due for each month, or part of a month, that the return isn’t filed up to a maximum of 25% of the tax due. If the return is more than 60 days late, the minimum penalty is the smaller of $525 or the tax due. The penalty won’t be imposed if you can show that the failure to file on time is due to reasonable cause. If you receive a notice about penalty and interest after you file this return, send us an explanation and we will determine if you meet reasonable-cause criteria. Don’t attach an explanation when you file Form 1041-N.

For more information about penalties for late filing, see Late Filing of Return in the Instructions for Form 1041.

Late Payment of Tax Section 6651 also provides for penalties for late payment. Generally, the penalty for not paying the tax when due is ¹ /2 of 1% of the unpaid amount for each month or part of a month it remains unpaid. The maximum penalty is 25% of the unpaid amount. The penalty is imposed on the net amount due. Any penalty is in addition to interest charges on late payments.

Caution: If you include interest or either of these penalties with your payment, identify and enter these amounts in the bottom margin of Form 1041-N. Don’t include the interest or penalty amount in the balance of tax due on line 18.

Underpaid Estimated Tax If the trustee underpaid estimated tax, use Form 2210, Underpayment of Estimated Tax by Individuals, Estates, and Trusts, to figure any penalty due. Enter the amount of the penalty in the bottom margin of Form 1041-N. Don’t include it in the balance of tax due on line 18.

Other Penalties Other penalties can be imposed for negligence, substantial understatement of tax, and fraud. See Pub. 17, Your Federal Income Tax, for details on these penalties.