Paid late? Review IRS late payment penalty relief

The late payment penalty adds 0.5% of unpaid tax every month, and interest on the balance grows daily.

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You filed but could not pay in full, and now the bill grows every month. The IRS late payment penalty is 0.5% of your unpaid tax a month, up to 25%, and it drops to 0.25% on a payment plan. It can also be removed, and a tax pro can ask for you.

• 10 days

  After a notice of intent to levy, you have 10 days before the rate goes to 1% a month.

  So the penalty doubles if that notice sits in a drawer.

  Next: Call a licensed tax pro about the levy notice before day 10.

• 3 years

  Already paid the penalty? The Form 843 instructions say you generally must claim within 3 years after filing the return or 2 years after paying, whichever is later.

  So for example, a return filed August 14, 2025 and paid that day has until August 14, 2028.

  Next: Check both dates on your records before you call or mail the form.

• 0.25%

  On an approved payment plan, the rate is 0.25% a month if you filed on time.

  So a plan halves the penalty from the first month.

  Next: Review a plan as soon as you know you cannot pay in full.

The rate and the cap

For a 2024 return filed on time with $6,000 unpaid, each month adds $30 in penalty. After 12 months, that is $360, plus interest.

The IRS failure to pay page gives the rules: 0.5% a month, and a partial month counts as a whole one. It stops at 25% of the unpaid tax.

Two things make it worse. If you also filed late, the late filing penalty runs too. If you don't pay within 10 days of a notice of intent to levy, the rate goes to 1% a month.

Lower rate on a payment plan

If you filed on time as an individual and the IRS approves a payment plan, the rate halves to 0.25% a month. On $6,000 unpaid, that cuts the monthly charge from $30 to $15 at the start.

The IRS payment plans page explains the rules. Interest still runs on the balance while you pay.

Getting it removed

Late payment is covered by first-time removal if your 3 earlier years were clean. A reason outside your control may also work, but the IRS says not having the money is not enough on its own. See reasons the IRS accepts.

When the penalty comes off, the IRS removes the interest on it too. The tax and its own interest stay.

Calculator

Enter your tax and dates below. It starts with a $4,000 example paid four months late.

For the late filing side, see the late filing penalty. The full calculator shows interest step by step.