How To Deal with Interest Charges

If you do not settle your taxes on time, the IRS considers taxes you have not paid to be borrowed money. The IRS is required by Congress to charge interest on your tax debt. You won't only be charged penalties for not paying your taxes on time, but you will also be charged interest on the unpaid amount. IRS issues come when you do not pay taxes or pay them late.

Charging penalties and interest on unpaid taxes is part of the punishment the IRS imposes on you for not paying taxes on time. Interest starts accumulating when the tax is due, not when it is determined to be owed. This interest is based on the balance, including whatever penalties assessed, and is compounded on a daily basis. Your bill will be double or triple before you know it at this rate.

You'll be charged interest, regardless of why you have unpaid/late taxes, even if it's a mathematical error. Compounded on a daily basis and posted quarterly, interest can go from 4% to 10%, and will not cease to accumulate unless payment is made.

A detailed interest and penalty printout is available if requested. It'll reflect: 1)interest computations and a list of all tax penalties; 2) penalties assessed, interest rates, dates, and credits for refunds or payments; 3) penalty charges and interest on tax amounts; 4) applicable penalties; 5) account summary with tax due, showing current interest and penalty amounts.

Interest may be lessened or eliminated if you qualify for an Offer in Compromise. Other than that, interest may only be cancelled or abated if it was due to delays by the IRS or if it was applied in error. You can figure out if the interest and penalties charged to you are truly correct with the help of our firm.