Penalties

Taxpayers who don’t meet their tax obligations may owe a penalty.

The IRS charges a penalty for various reasons, including if you don’t:

• File your tax return on time
• Pay any tax you owe on time and in the right way
• Prepare an accurate return
• Provide accurate and timely filed information returns

We may charge interest on a penalty if you don’t pay it in full. We charge some penalties every month until you pay the full amount you owe.

Understand the different types of penalties, what you need to do if you get a penalty and how to avoid getting one.

How you know you owe a penalty

When we charge you a penalty, we send you a notice or letter by mail. The notice or letter will tell you about the penalty, the reason for the charge and what to do next. These notices and letters include an identification number.

Verify the information in your notice or letter is correct. If you can resolve the issue in your notice or letter, a penalty may not apply.

For more information, see Understanding your notice or letter.

Types of penalties

These are some penalties we send notices and letters about:

• Information return applies to taxpayers who don’t file or furnish their required information return or payee statement correctly by the due date.
• Failure to file applies when you don’t file your tax return by the due date.
• Failure to pay applies when you don’t pay the tax you owe by the due date.
• Accuracy-related applies when you don’t claim all your income or when you claim deductions or credits for which you don’t qualify.
• Erroneous claim for refund or credit penalty applies when you submit a claim for refund or credit of income tax for an excessive amount and reasonable cause does not apply.
• Failure to deposit applies when you don’t pay employment taxes accurately or on time.
• Tax preparer penalties apply to tax return preparers who engage in misconduct.
• Dishonored checks or other form of payment applies when your bank doesn’t honor your check or other form of payment.
• Underpayment of estimated tax by corporations applies when you don’t pay estimated tax accurately or on time for a corporation.
• Underpayment of estimated tax by individuals applies when you don’t pay estimated tax accurately or on time as an individual.
• International information reporting applies to certain taxpayers who fail to timely and correctly report foreign sourced financial activity.

Interest on a penalty

We charge interest on penalties.

The date from which we begin to charge interest varies by the type of penalty. Interest increases the amount you owe until you pay your balance in full. For more information about the interest we charge on penalties, see Interest.

Pay a penalty

Send us a payment or pay your taxes in full to stop future penalties and interest from adding up.

Remove or reduce a penalty

We may be able to remove or reduce some penalties if you acted in good faith and can show reasonable cause for why you weren’t able to meet your tax obligations. By law we cannot remove or reduce interest unless the penalty is removed or reduced.

For more information, see penalty relief.

Dispute a penalty

If you disagree with the amount you owe, you may dispute the penalty.

Call us at the toll-free number at the top right corner of your notice or letter or write us a letter stating why we should reconsider the penalty. Sign and send your letter along with any supporting documents to the address on your notice.

Have this information when you call or send your letter:

• The notice or letter we sent you
• The penalty you want us to reconsider (for example, a 2021 late filing penalty)
• For each penalty, an explanation of why you think we should remove it

If a notice or letter we sent you has instructions or deadlines for disputing the penalty, pay careful attention. You must follow the instructions to dispute the penalty.

If you didn’t receive a notice or letter, get telephone assistance.

Avoid a penalty

You can avoid a penalty by filing accurate returns, paying your tax by the due date, and furnishing any information returns timely. If you can’t do so, you can apply for an extension of time to file or a payment plan.

Apply for an extension of time to file

If you need more time to prepare your tax return, apply for an extension of time to file. This does not grant you an extension of time to pay. A payment plan can help you pay over time.

Apply for a payment plan

If you can't pay the full amount of your taxes or penalty on time, pay what you can now and apply for a payment plan. You may reduce future penalties when you set up a payment plan.