Failure to Pay Penalty

The failure to pay penalty applies if you don’t pay the tax when due.

The penalty you must pay is a percentage of the taxes you didn’t pay.

How you know you owe the penalty

We send you a notice or letter if you owe the failure to pay penalty. For more information, see Understanding your IRS notice or letter.

How we calculate the penalty

We calculate the failure to pay penalty based on how long your overdue taxes remain unpaid. Unpaid tax is the total tax required to be shown on your return minus amounts paid through withholding, estimated tax payments and allowed refundable credits.

The failure to pay penalty will not exceed 25% of your unpaid taxes.

We calculate the failure to pay penalty based on if you:

• Fail to pay amount shown as tax on your return
• Fail to pay the tax you didn’t report on your return

Failure to pay amount shown as tax on your return

If you don’t pay the amount shown as tax you owe on your return, we calculate the failure to pay penalty in this way:

• The failure to pay penalty is 0.5% of the unpaid taxes for each month or part of a month the tax remains unpaid. The penalty won’t exceed 25% of your unpaid taxes.
• If both a failure to pay and a failure to file penalty are applied in the same month, the failure to file penalty will be reduced by the amount of the failure to pay penalty applied in that month. For example, instead of a 5% failure to file penalty for the month, we would apply a 4.5% failure to file penalty and a 0.5% failure to pay penalty. 
• If you filed your tax return on time as an individual and you have an approved payment plan, the failure to pay penalty is reduced to 0.25% per month (or partial month) during your approved payment plan.
• If you don’t pay your tax in 10 days after getting a notice from us with our intent to levy, the failure to pay penalty is 1% per month or partial month.
• We apply full monthly charges, even if you pay your tax in full before the month ends.

Failure to pay tax you didn’t report on your return

If you owe tax that you didn’t report on your return or paid on time, we calculate the failure to pay penalty in this way:

• If we find that you owe tax you didn’t report on your return, we’ll send you a notice or letter with the amount due and a due date to pay.  Due dates are generally 21 calendar days after we send the notice or 10 business days after we send the notice if the tax amount you owe is $100,000 or more.
• If you don’t pay your tax by the due date in the notice or letter we send to you, the failure to pay penalty is 0.5% of the tax you didn’t pay timely for each month or partial month that you don’t pay after the due date.
• If you filed your tax return on time as an individual and you have an approved payment plan, the failure to pay penalty is reduced to 0.25% per month (or partial month) during your approved payment plan.
• If you don’t pay your tax in 10 days after getting a notice from us with our intent to levy, the failure to pay penalty is 1% per month or partial month.
• We apply full monthly charges, even if you pay your tax in full before the month ends.

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 the letter along with any supporting documents to the address on your notice or letter.

Have this information when you call or send your letter:

• The notice or letter we sent you
• The penalty you want us to reconsider
• An explanation of why you think we should remove each penalty

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

Avoid a penalty

You can avoid a penalty by filing and paying your tax by the due date. 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 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.

Get help

For help with a penalty, call the phone number on your notice. If you didn’t receive a notice, use telephone assistance.

Law and regulations

• Failure to pay tax —  26 USC 6651: Failure to file tax return or to pay tax
• Failure to pay tax — eCFR :: 26 CFR 301.6651-1 -- Failure to file tax return or to pay tax