Tax & compliance
Failure-to-Pay Penalty
Formula reviewed by Tahir Asif, CMA
A penalty of 0.5% of the unpaid tax for each month or part of a month, up to 25%, that runs until the tax is paid.
If you do not pay the tax shown on your return by the original due date, the IRS charges 0.5% of the unpaid tax for each month or part of a month, up to a maximum of 25%. An extension to file does not extend the time to pay. The rate falls to 0.25% during an approved installment agreement if the return was filed on time, and rises to 1% after a notice of intent to levy.
Interest is charged separately, at the federal short-term rate plus 3 points, compounded daily, and it is not reduced by penalty relief.
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