Texas tax penalties at a glance

Texas is one of the states with no broad personal income tax, so there is no state income-tax penalty for individuals. The Texas Comptroller of Public Accounts still assesses penalties and interest on other taxes — sales and use, franchise, or excise — and those figures are below. Your federal IRS penalties apply no matter which state you are in.

Late-Filing Penalty
No income tax. $50 penalty per report filed after the due date (assessed even if no tax is due), on sales and franchise tax reports
Late-Payment Penalty
5% if paid 1–30 days late; 10% if more than 30 days late; an additional 10% may apply after a Notice of Tax Due
Interest on Unpaid Tax
7.75% per year (2026); accrues beginning the 61st day after the due date
State Tax Authority
Texas Comptroller of Public Accounts
State DOR Phone
(800) 252-5555

Source: Texas Comptroller of Public Accounts (official guidance). Penalty caps and interest rates change — several states reset interest quarterly — so verify the current figure before relying on it.

Getting a Texas penalty waived

Texas levies a franchise (margin) tax and sales tax, not income tax. Request a waiver using Form 89-224 (late report/payment) or Form 89-225; the Comptroller weighs compliance history.

— Texas vs. Federal —

Most people who owe a Texas penalty also owe a federal IRS penalty — and the federal one is usually larger. The good news: federal penalties can often be removed entirely through first-time abatement or reasonable cause. That is the part our practice handles.

The federal side: IRS penalties & Form 843

The IRS does not assess penalties differently in Texas than anywhere else — failure-to-file, failure-to-pay, and failure-to-deposit penalties are governed by federal law and apply uniformly nationwide. What changes by state is the IRS service center your case routes through. For Texas, federal abatement requests are processed through the IRS service center in Austin, TX.

The mechanism is the same everywhere: Form 843, mailed with substantiation. The legal grounds are first-time penalty abatement, reasonable cause, statutory exception, or administrative waiver. When abatement is granted, the IRS refunds the penalty and the interest it charged on that penalty.

Federal Form for Abatement
Form 843 (mailed)
IRS Service Center
Austin, TX
Authorization Form
Form 8821 (Tax Info Auth)
Typical IRS Processing
60–120 days

What our practice does for Texas taxpayers

We represent clients in all 50 states under IRS Circular 230 authorization. Because federal abatement is state-agnostic, location is rarely a constraint. For Texas clients specifically, we pull your IRS transcripts (via Form 8821), confirm exactly which penalties were assessed and for which periods, route Form 843 to the Austin, TX service center, and build the reasonable-cause substantiation. The work is contingency-based: if we do not recover, you do not pay.

Start with the calculator on this page — enter your name, email, and rough penalty and interest amounts. We return a refund estimate within one business day and, if you choose to proceed, send the Form 8821 authorization for signature.