How Much Interest Does the IRS Charge?

On: December 7, 2018

The IRS charges interest on tax, penalties, and interest until the balance is paid in full. The interest accumulates (accrues) daily. This is what makes IRS interest makes it so expensive. Other loans, like mortgage loans, credit cards and home equity loans, usually accrue monthly, if that often. IRS interest stops only accruing when you pay your balance in full. There is no additional balance for paying your balance in full. The interest rate is determined every three months (quarterly). This doesn’t change the interest rate for prior quarters or years. This is what makes it so difficult to give a straight answer to this question. Interest on the failure to file penalty, also called the delinquency penalty, starts on the return due date, including any extension of time to file. Interest on the failure to pay, estimated tax, and dishonored check penalties starts on the notice date of that penalty amount. Interest on penalties related to the accuracy of your tax liability starts on the return due date, including any extension of time to file.