N. Additions to Tax for Not Paying Tax on Time

There is an addition to tax for not paying tax when due (section 6651). The penalty is generally ¹ /2 of 1% of the unpaid tax for each month or part of a month the tax remains unpaid, not to exceed 25% of the unpaid tax. If there was reasonable cause for not paying the tax on time, the penalty can be waived. However, interest is charged on any tax not paid on time, at the rate provided by section 6621.

Estimated tax penalty. The section 6655 penalty for failure to pay estimated tax applies to the tax on net investment income of domestic private foundations and section 4947(a)(1) nonexempt charitable trusts. The penalty also applies to any tax on unrelated business income of a private foundation. Generally, if a private foundation's tax liability is $500 or more and it didn't make the required payments on time, then it is subject to the penalty.

For more details, see the discussion of Form 2220, Underpayment of Estimated Tax by Corporations, in D. Other Forms You May Need To File, earlier.

A private foundation is also subject to the section 6656 penalty for failure to deposit employment taxes when due. See sections 11 and 12 of Pub. 15 (Circular E), Employer’s Tax Guide, for details.