You receive a notice from the IRS that includes one or more penalties. The penalty is identified by a code. The IRS should include a 4-page information sheet with the return indicating the nature of the penalty.
Some penalties only apply to specific returns, for example, late depositing of employment taxes.
There are over 60 different codes applying to penalties, interest, and adjustments in that 4-page notice. In this list we'll give you some detail on the most important and frequently encountered penalties, interest, etc. Penalty Notice Codes 01 Filing and Paying Late . It applies to individual and some other returns. 02 Underpayment of Estimated Tax .