Each year the IRS assesses billions of dollars in penalties against taxpayers. They charge penalties on top of penalties and double penalties. Penalties for failure to file, filing late, failure to pay, paying late, underpayment, there is even a penalty if you make a mistake writing down your social security number on the return! To make matters worse, the IRS charges you interest on the penalties and interest on the interest.
When properly challenged, the IRS abates penalties 40% of the time.
Originally the IRS imposed penalties to punish taxpayers and to encourage "voluntary compliance." Unfortunately this has turned into an additional source of revenue for the IRS. Penalties can be anywhere from 25% to 100% of the tax owed, and after they add on the interest you can end up owing triple the amount you initially owed. Penalties can be "abated" (erased/forgiven), but the IRS will never do it voluntarily. You must have a representative who knows the tax code to petition for abatement, and argue on your behalf.