What is the IRS penalty for not filing taxes versus not paying taxes?

The penalties are different and the failure-to-file penalty is significantly more severe. Failure to file: 5% of unpaid taxes per month, up to 25% maximum. Failure to pay: 0.5% of unpaid taxes per month, up to 25% maximum. If both apply simultaneously, the failure-to-file penalty is reduced by the failure-to-pay amount, so the combined penalty is 5% per month for the first 5 months. After 5 months, the failure-to-file penalty maxes out at 25%, but the failure-to-pay penalty continues at 0.5% per month until it also reaches 25%. This means the maximum combined penalty is 47.5% of the unpaid tax (25% + 22.5%), plus interest. The critical takeaway: always file your return on time, even if you can't pay. Filing on time and not paying results in a 0.5% monthly penalty. Not filing and not paying results in a 5% monthly penalty, which is 10x worse. You can also file for a 6-month extension (Form 4868) to avoid the failure-to-file penalty, though the failure-to-pay penalty still applies.