How to Pay an IRS Penalty

This article was co-authored by Gina D'Amore. Gina D'Amore is a Financial Accountant and the Founder of Love's Accounting. With 12 years of experience, Gina specializes in working with smaller companies in every area of accounting, including economics and human resources. She holds a Bachelor's Degree in Economics from Manhattanville College and a Bookkeeping Certificate from MiraCosta College.

This article has been viewed 32,761 times.

If you do not file your taxes at all or you file them past the April 15 deadline, you may get a notice that you are being charged a penalty. The IRS may also penalize you if you cannot pay all of the taxes you owe. Though being charged with a penalty by the IRS can be stressful, you can pay it off online, by check, money order, wire transfer, or cash. Make sure you take steps to avoid paying penalties to the IRS in the future so you do not have to pay more than what you owe.

Determining How Much You Owe

• The failure-to-file penalty is often higher than if a failure-to-pay penalty so it is worth it for you to file your taxes in the long run, as you will end up paying a lower penalty.

• Try to pay off as much of the taxes you owe the IRS before the penalty kicks in, as this will make the penalty lower.

• If you are late to pay your taxes for the first time, you may qualify for a lower penalty through a first-time penalty abatement. [4] X Research source
• Talk to your accountant or a tax professional for advice on how you can get the penalty lowered.

Paying the Penalty

• A short-term plan last 120 days or less and is free to set up. This is a good option if you feel you can get the funds to pay the penalty relatively soon.
• A long-term plan can last more than 120 days. It costs $31 USD to set up if you are paying with direct debit and $149 USD to set up if you are paying with debit, credit, check, or money order.

• It may take several days for your enrollment to go through so sign up sooner than later to avoid having to pay a higher IRS penalty.

• If you are paying the penalty in installments, send the check or money order to the address noted on your installments notice from the IRS.

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• Look for an IRS office near you here: https://apps.irs.gov/app/officeLocator/index.jsp.
• You can also pay off the penalty in installments in cash by going in person to the IRS office.

Avoiding Future Penalties

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• If you use an accountant to help you file your taxes, you may make an appointment with them several weeks before the due date so you file your taxes on time.
• Do not skip filing your taxes, even if you are going to file them late, as this can lead to a steeper penalty.
• Remember that the tax deadline is December 31. April 15 is the deadline for tax paperwork, not tax payment.

• Late payments interest is calculated daily, so you have to keep that in mind, especially if you're writing a check, since the interest will keep growing.

• You can sign up for automatic withdrawals to your savings account each month through your bank so you do not have to worry about doing it yourself.

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1. ↑https://www.irs.gov/newsroom/eight-facts-on-late-filing-and-late-payment-penalties
2. ↑https://www.irs.gov/newsroom/eight-facts-on-late-filing-and-late-payment-penalties
3. ↑https://www.irs.gov/newsroom/eight-facts-on-late-filing-and-late-payment-penalties
4. ↑http://www.taxdebthelp.com/tax-problems/unpaid-taxes/failure-to-pay-penalty
5. ↑https://www.irs.gov/payments/online-payment-agreement-application
6. ↑https://www.irs.gov/payments/eftps-the-electronic-federal-tax-payment-system
7. ↑https://www.irs.gov/payments/pay-by-check-or-money-order
8. ↑https://www.irs.gov/payments/pay-by-check-or-money-order
9. ↑https://www.irs.gov/newsroom/eight-facts-on-late-filing-and-late-payment-penalties

About This Article

This article was co-authored by Gina D'Amore. Gina D'Amore is a Financial Accountant and the Founder of Love's Accounting. With 12 years of experience, Gina specializes in working with smaller companies in every area of accounting, including economics and human resources. She holds a Bachelor's Degree in Economics from Manhattanville College and a Bookkeeping Certificate from MiraCosta College. This article has been viewed 32,761 times.

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