You already owe a tax debt to the IRS or State. Then they add interest and penalties on top of that? Talk about adding insult to injury.

It is important to understand how interest and penalties are applied by the IRS to know how it impacts your tax debt.


Interest is added to the tax debt as long as it remains unpaid. Rates can fluctuate from 3%-9%. Interest is calculated every day the tax debt goes unpaid, whether you are in a payment agreement or not.

Penaltiespenalties, interest, strategic tax resolution

When it comes to penalties, there are two main types – Failure to File and Failure to Pay.

  • Failure to File Penalty adds 5% of the total tax debt every month you are unfiled (up to 25%)
  • Failure to Pay Penalty adds an additional 0.5% of the total tax debt every month, up to a max of 25%, until the tax debt is paid

Taxpayers may seek Penalty Abatement to eliminate a portion of or all penalties from a tax debt.

It is important to retain professional representation to ensure the proper abatement is applied to your case if you qualify.

Interest and penalties accrue on your tax debt until it is paid. Do not put off dealing with your tax problems any longer! Call us today!

One Last Thing

If you happen to find yourself in a bit of tax trouble, Strategic Tax Resolution can help. We offer a range of tax resolution services to meet your needs. Contact us or give us a call at 888-339-4914 for a free consultation. We’ll help you get on your #RoadToResolution.