What You Should Know About Interest Charges

If you do not settle your taxes on time, the IRS considers the money you have not paid to be borrowed money. The U.S. Congress requires the IRS to charge interest on your unpaid taxes. You'll be charged interest on the unpaid taxes, plus the penalties imposed because of late payment. IRS issues come when you don't pay taxes or pay them late.

The IRS imposes punishment on you for not settling your taxes on time through penalties and interest. Interest starts accumulating when the tax is due, not when it is determined to be owed. This interest is charged on the balance, which includes whatever penalties assessed, and is compounded daily. Your bill will double or triple before you know it at this rate.

You will still be charged interest, no matter why you have unpaid/late taxes. Interest will still accumulate for the taxes unpaid, even for a mathematical error. This interest won't stop unless the IRS receives payment. Interest is posted every three months but compounded daily. It can go from 4-10% per year.

You can ask for documentation showing the penalties and interest your unpaid tax is accruing and it'll contain: 1) all tax penalties and interest computations; 2) credits for refunds and/or payments, and interest rates, dates, and penalties assessed; 3) tax amount charges, including penalties and interest; 4) applied penalties; 5) amount due shown on account summary, with updated interests and penalties.

Let our firm help you look through this form and determine if you really do need to pay the penalties and interest you are charged. Interest is normally not cancelled or abated, as the IRS calls it, unless it was erroneously applied or is due to their delays. If you are eligible for an Offer in Compromise, interest may be reduced or eliminated altogether. Get IRS Help

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Originally posted 2007-12-07 04:10:11. Republished by Blog Post Promoter

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