![TAS Tax Tip: Why Do I Owe A Penalty And Interest And What Can I Do About It?](https://www.taxconnections.com/taxblog/wp-content/uploads/Erin-M-Collins-9.png?resize=90%2C90&ssl=1)
There are many reasons why the IRS may charge penalties on your tax account. The IRS is legally required, under IRC § 6601(a), to charge interest when you fail to pay the full amount you owe on time. Interest may also accrue on penalties. Interest, and any applicable penalties, will continue to accrue until you pay your balance due in full. Here are some of the most common penalties, information on why they may have been charged, and how to request penalty abatement (removal) if applicable.
First let’s talk about some common penalty charges on individual accounts, along with interest, and why the IRS charges them.
Common penalties include:
- Failure to file – you didn’t file your tax return by the return due date or extended due date if an extension to file is requested and approved.
- Failure to pay – you didn’t pay the taxes reported on your tax return in full by the due date of the original tax return. An extension to file doesn’t extend the time to pay, so you must pay your taxes by the original due date of the tax return even if you have requested an extension of time to file your tax return. In addition, the IRS may charge a failure to pay penalty if the IRS sends a request for payment and you fail to pay on time.
- Failure to pay proper estimated tax – you didn’t pay enough taxes due for the year with your quarterly estimated tax payments, or through withholding, when required.
- Bad check – your bank doesn’t honor your check or other form of payment.
Interest
The IRS is required to charge interest on any unpaid balance owed until it is paid in full. Learn more on the IRS’s Interest page, or view the latest interest rates.
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