At the federal level, this set of civil penalties is complex and depends on the infraction incurred. One category is referred to as interest of deficiencies and is based on prevailing interest rates and is sufficiently high to eliminate the incentive not to pay when the tax is due. Penalties for filing a late personal tax return are substantial, starting at 3 percentage points above the federal short-term rate of 5% a month and increasing to a maximum of 25% or more. A minimum penalty is also assessed that recoups the initial cost of the IRS to locate taxpayers who have not filed