The April 15 deadline passed and you did not file your return. If that return includes cryptocurrency gains, the penalties are now accruing. Every month you wait adds cost. Here is what happens, what it costs, and how to stop the bleeding.

Failure-to-File Penalty

The failure-to-file penalty under §6651(a)(1) is 5% of the unpaid tax per month, up to a maximum of 25%. This starts the day after the deadline. If you owe $50,000 in crypto taxes, the penalty is $2,500 per month for five months — $12,500 in penalties alone. If you also have a failure-to-pay penalty running, the combined rate for months where both apply is 5% (the failure-to-file penalty is reduced to 4.5%).

Failure-to-Pay Penalty

The failure-to-pay penalty under §6651(a)(2) is 0.5% of the unpaid tax per month, up to 25%. This is smaller than the failure-to-file penalty but runs for a longer period — up to 50 months. Combined with interest that compounds daily, the total cost of delay is substantial.

Interest

Interest on unpaid tax runs from the original due date at the federal short-term rate plus 3%. As of 2026, this rate is approximately 7-8% annually. Interest compounds daily and applies to both the tax and the penalties. There is no mechanism to abate interest except in narrow circumstances involving IRS error.

Filing Stops the Bleeding

The single most important thing you can do is file the return. Filing stops the failure-to-file penalty immediately. Even if you cannot pay the full amount, filing the return and requesting an installment agreement or submitting an Offer in Compromise begins the resolution process and stops the most expensive penalty from accruing.

Extension vs. Filing

If the deadline has not yet passed, filing Form 4868 extends the filing deadline six months. This does not extend the payment deadline — you must estimate and pay your liability by April 15 to avoid interest and failure-to-pay penalties. But it does eliminate the much larger failure-to-file penalty. If you have crypto gains and cannot calculate them by April 15, always file an extension with an estimated payment.

Getting Current

Attorney Darrin T. Mish handles late-filed returns and the penalty negotiations that follow. A free consultation gives you the exact damage calculation and the most efficient path to resolution. Thirty-two years of doing this means no surprises.