Interest

The IRS charges underpayment interest when you don't pay your tax, penalties, additions to tax or interest by the due date. The underpayment interest applies even if you file an extension.

If you pay more tax than you owe, we pay interest on the overpayment amount.

Underpayment and overpayment interest rates vary and may change quarterly. Changes don't affect the interest rate charged for prior quarters or years. See Quarterly Interest Rates for more information.

Topics

• When does the IRS charge Interest
• When does the IRS pay Interest
• Get Help
• Laws and Regulations

When does the IRS charge interest?

We charge interest when a taxpayer has an unpaid liability comprised of tax, penalties, additions to tax, or interest.

Stop and start dates for underpayment interest

In general, we charge interest on underpayments starting on the due date of the amount you owe and will continue to accrue until the balance is paid in full:

• Tax is due on the return filing date; extensions to file do not extend the date for payment of the tax.
  
• Penalties and additions to the tax due dates vary by penalty type:
  • Failure to File penalty, also called the delinquency penalty, is due on the return due date, or extended return due date if an extension of time is filed.
  • Failure to Pay, Underpayment of Estimated Tax by Corporations, Underpayment of Estimated Tax by Individuals and Dishonored Check penalties are due on the date we send you a notice or assess the penalty.
  • Accuracy-related penalties are due on the return due date, or extended return due date if an extension of time is filed.

  If you received a notice, you will not be charged interest on the amount shown if you pay the amount owed in full on or before the "pay by" date.

  Pay your balance

  Pay your balance in full to stop underpayment interest from accumulating daily.

  Apply for a payment plan

  If you can't pay the full amount of your taxes on time, pay what you can now and apply for a payment plan. You can enter into an Installment Agreement to pay the remaining balance. Interest will continue to accrue daily on any amount not paid, including on both penalties and interest.

  Reduce interest you owe

  If you're able to reduce the amount of the tax or penalties you owe by filing an amended return or qualifying for penalty relief, we'll automatically reduce the related interest. We don't remove or reduce interest for reasonable cause or as first-time relief.

  How to dispute interest you owe

  We may reduce the amount of interest you owe only if the interest is applied because of an unreasonable error or delay by an IRS officer or employee.

  For more information on reducing the amount of interest you owe, see details on Interest Abatement.

  To dispute interest due to an unreasonable error or IRS delay, submit Form 843, Claim for Refund and Request for Abatement PDF or send us a signed letter requesting that we reduce or adjust the overcharged interest. For more information, see Instructions for Form 843 PDF .

  When does the IRS pay interest?

  Stop and start dates for overpayment interest

  In general, we pay interest on the amount you overpay starting from the later of the:

  • Tax return filing due date
  • Late filed tax return received date
  • Date we get your return in a format we can process
  • Date the payment was made

  We stop paying interest on overpayments on the date we refund your overpayment (and interest) or offset it to an outstanding liability.

  Exception: We have administrative time (typically 45 days) to issue your refund without paying interest on it.

  How to dispute insufficient interest paid

  If you think we underpaid interest owed to you on refunds or credits you're eligible for, you can file an informal claim or complete and send Form 843 PDF for us to consider allowing additional overpayment interest. Make sure to include your own computation and reason for making the request for additional interest on Line 7 (see Instructions for Form 843).

  Your request must be received within six years of the date of the scheduled overpayment.

  Get help

  For help with interest:

  • Call the phone number listed on the top right-hand side of the notice
  • Call 800-829-1040
  • Use telephone assistance
  • Contact your local Taxpayer Assistance Center

  Please have your paperwork (such as cancelled checks, amended return, etc.) ready when you call

  Law and regulations

  • IRC Section 6404 - Abatements
  • IRC 6601 - Underpayment Interest
  • IRC 6611 - Overpayment Interest
  • IRC 6621 - Interest Rates