My apologies I guess I was not making myself clear.
There are two types of penalties from the IRS regarding these omissions:
(1) Failure to file
(2) Failure to pay
Both of these penalties, however, have as a basis, taxes due.
Failure to pay:
The late payment penalty applies to any portion of federal tax
that is unpaid as of the payment due date
. For each month or part of a month that the tax remains unpaid, the IRS imposes a failure-to-pay penalty of half of one percent (0.5%). The late payment penalty cannot exceed 25% of the net amount of the tax due. The IRS may waive the penalty if the taxpayer can show there was a reasonable cause for the late payment. (Internal Revenue Code
section 6651 paragraphs (a)(2) and (b)(2).)
Again, however, if your assumption is correct, regarding no TAXABLE income
, this penalty has no basis
Failure to File:
The late filing penalty applies to any portion of tax that is unpaid as of the payment due date and the tax return is filed after the filing due date. The failure-to-file penalty is calculated based on the time from the deadline of your tax return (including extensions) to the date you actually file your tax return. The penalty is 5% for each month or part of a month that the tax return is late, up to a maximum penalty of 25%. "If you file your return more than 60 days after the due date or extended due date, the minimum penalty is the smaller of $135 or 100% of the unpaid tax" (from Publication 17, section on penalties). The late filing penalty is based on the net amount of tax due as shown on the tax return. This penalty can be waived at the discretion of the IRS if taxpayer can show that the return was filed late due to a reasonable cause. (Internal Revenue Code section 6651 paragraphs (a)(1) and (b)(1).)
Again, basis here is "net amount of tax due"
So, as I have already mentioned. When there is no tax due there is no penalty. Both of the penalties have, as a basis, taxes due. If there are no taxes due, there are no penalties.
IN the US, tax returns
are filed either ...
(1) to calculate the amount of taxes due and pay those taxes, OR
(2) to collect refunds where withholding
has been done against wages or there are other credits that may be due the taxpayer.
Your assumption that a return needs to be filed is invalid, UNLESS, you are referring to WITHHOLDING that should have been done, against US source income or US "effectively connected" income.
If this is not either "US source income"
(U.S. Source Income - income is generally considered U.S. Source if the location of the activity for which the payment is being made is in the U.S.):
Income "effectively connected"http://www.irs.gov/Individuals/International-Taxpayers/Effectively-Connected-Income-(ECI)
See this: (from IRS enrolled agent XXXXX XXXXX)http://taxes.about.com/od/backtaxes/qt/irs_tax_penalty.htm
And see this from IRS: http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Filing-Late-and-or-Paying-Late