IRS Interest Charges Notice
The IRS charges interest on unpaid tax from the due date of the return until the date you pay in full. Interest compounds daily and cannot be abated except in cases of IRS error.
Respond to Interest Charges
Upload your notice for payment options and interest calculation review
Prepare My IRS ResponseHow IRS Interest Is Calculated
- Interest rate is set quarterly by the IRS (federal short-term rate plus 3%)
- Interest compounds daily on the unpaid balance
- Interest accrues on both unpaid tax and unpaid penalties
- Interest begins accruing from the original return due date
Can IRS Interest Be Reduced or Abated?
When Interest Can Be Abated
- IRS error or delay in processing your payment
- IRS unreasonable error or delay in performing ministerial or managerial acts
- IRS provided incorrect written advice
Interest abatement is rare. The IRS will not abate interest simply because you cannot afford to pay.
How to Stop Interest from Accruing
Only One Way to Stop Interest
- Pay the full balance (tax + penalties + interest) immediately
- Interest stops accruing the day the IRS receives full payment
- Installment agreements do NOT stop interest from accruing – interest continues until paid in full
What If You Cannot Pay?
If you cannot pay the full amount immediately:
- Installment Agreement – Pay over time (interest continues to accrue at reduced rate)
- Currently Not Collectible Status – Temporarily suspend collection (interest continues to accrue)
- Offer in Compromise – Settle the debt for less (interest stops if offer is accepted)
Disputing Interest Charges
You can dispute interest charges if:
- The IRS made an error in calculating the starting date
- The IRS delayed processing your payment
- You made payments that were not properly credited
- The underlying tax liability was incorrect
Submit a written request for interest abatement with Form 843 and supporting documentation.
Disclaimer: This tool provides informational assistance only and does not constitute legal or tax advice. For complex tax matters, consult a licensed tax professional or attorney.