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What Is the Interest Rate On Unpaid Federal Taxes?

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Over the years, the IRS has been clamping down on the problem of unpaid taxes and have exercised a range of powers to boost the chances of securing taxes owed as well as to increase the likelihood of taxes being paid on time. There are various actions that the IRS can take in the event of late and unpaid taxes and this includes charging interest in federal taxes that remain unpaid.

In terms of the interest rate that is charged on unpaid taxes by the IRS, a late payment penalty of 0.5 percent for each month or part month the payment is late, which goes up to a maximum of 25 percent. If the IRS issues a notice of intent to levy but the sum owed still remains unpaid ten days after this, the 0.5 percent increases to 1 percent.

In order to avoid this interest being charged, it is important to ensure you get your taxes paid by the due date in full. If you cannot pay your taxes on time for any reason you need to ensure you contact the IRS in order to discuss your options and minimize on any penalties. It is important to remember that simply ignoring demands for tax can result in rising financial penalties and could even result in liens and levies in the event that you continue to ignore the demands made by the IRS. You can also speak to a tax professional such as an accountant or attorney to provide you with assistance.

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