Interest Charges

You give yourself IRS problems if you pay your taxes late or don't settle at all. Unpaid tax is considered as borrowed money and the U.S. Congress requires the IRS to charge interest on unpaid taxes. Furthermore, you're also subjected to penalties for late payment.

You'll know you're being punished by the IRS with the interest and penalties on your late/unpaid taxes. The tax bill will double or triple up before you know it. It's because interest is computed against the entire balance, starting on the date the tax was due, and penalties are assessed and compounded on a daily basis.

You will be charged interest, notwithstanding why you have late/unpaid taxes, even if it's just a mathematical error. Compounded on a daily basis and posted every 3 months, interest can go from 4% to 10%, and won't cease to grow until payment is made.

One of the first steps you have to do is ask for a detailed penalty and interest printout. This explanation will show: 1) lists of all your tax penalties and interest computations; 2) dates, interest rates, penalties assessed, and credits for payments or refunds; 3) interest and penalty charges on tax amounts; 4) penalties that were already applied; 5) an account summary reflecting amount due, including updated penalty and interest figures.

Interest may be reduced or cancelled if you are eligible for an Offer in Compromise. Due to IRS delays or if applied in error can only be instances when interest is abated or cancelled. You can determine if the interest and penalties charged to you are truly correct with the help of our office.