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Expanded Instructions
  • Line: 36
  • Step: 8
  • Step Subject: Pay
  • Instruction Year: 2023

Enter the penalty on line 36a, the interest on line 36b, and the total on line 36.

36a. Penalty

5% Penalty for Failure to Timely File a Return:

If you do not file your return by the due date and you paid less than 90% of the correct tax, you owe an additional 5% of the unpaid tax.

5% Penalty for Failure to Timely Pay the Tax Due:

If you file your return on time but paid less than 90% of the correct tax due, you owe an additional 5% of the unpaid tax.

Taxpayers may be subject to both the 5% failure to timely file penalty and the 5% failure to timely pay penalty.

If 90% of the correct tax due is paid by the due date, then no penalty is due. To determine if 90% was paid, multiply IA 1040, line 20 by 90% (.90). If the result is equal to or less than the amount on the IA 1040, line 30, plus any payment made with a return filed by the due date, 90% (.90) of the tax has been paid timely and no penalty is due.

Other penalties that may be assessed:

5% Penalty for audit or examination deficiency:

If the Department discovers an underpayment during an audit or examination, a penalty of 5% will be added to the unpaid tax.

$1,000 Penalty for Failure to File after Demand

A $1,000 penalty is assessed when a taxpayer continues to fail to file 90 days after the Department issues a demand letter. A separate penalty will be assessed for each unfiled return listed in the demand letter. This penalty is in addition to the failure to file penalties listed above.

75% Penalty for fraud or frivolous tax return filings or willful failure to file a return

A person who willfully intends to make a false or frivolous tax return to claim a refund, or to evade tax is guilty of fraud. A penalty of 75% of the refund claimed will be due. This penalty cannot be waived.

$500 Civil Penalty:

A $500 civil penalty is assessed when a return is considered to be a “frivolous return.” A “frivolous return” is a return that lacks sufficient information to determine the substantial correctness of the amount of tax liability or contains information that indicates the amount of tax shown is substantially incorrect and this conduct is due to a position of law taken that is frivolous or a desire to delay or impede the administration of the tax laws of Iowa.


Penalties can be waived under limited circumstances, as described in Iowa Code section 421.27. Complete and submit a Penalty Waiver Request form (78-629) to request a penalty be waived.

36b. Interest

Interest must be added to delinquent tax. Interest is added at a rate of 0.8% per month after the due date of the return (April 30) and accrues each month until paid in full. Part of a month constitutes a whole month, so if you pay the tax on June 3, you are late for May and June.