IRS Form 668(Z) is used to release a federal tax lien. As such, there is no specific penalty for the late filing of this form, as it doesn't involve reporting taxes or payments to the IRS. The filing of Form 668(Z) is typically done once the tax liability has been satisfied, and the lien is being released. It is important to file this form in a timely manner to reflect the updated lien status accurately. However, if the form is not filed promptly, it may lead to delays in clearing the lien from the taxpayer's record.