IRS Penalty and Interest Calculator
Estimate the failure-to-pay penalty and interest owed on unpaid federal taxes based on IRS rules.
Formulas Used
Unpaid Balance: Unpaid Tax = Total Tax Owed − Amount Paid
Failure-to-Pay Penalty (IRC §6651(a)(2)):
Penalty = min(Unpaid Tax × 0.5% × Months Late, 25% × Unpaid Tax)
Partial months count as full months. Rate rises to 1%/month after an IRS levy notice.
Failure-to-File Penalty (IRC §6651(a)(1)):
Gross FTF = min(Unpaid Tax × 5% × Months Late, 25% × Unpaid Tax)
Net FTF = Gross FTF − FTP Penalty (for overlapping months)
Minimum penalty if > 60 days late: lesser of $485 (2024) or 100% of unpaid tax.
Interest (IRC §6601):
Interest = Unpaid Tax × [(1 + r/365)days − 1]
where r = Federal Short-Term Rate + 3% (8% for 2024). Compounded daily.
Total Due: Unpaid Tax + FTP Penalty + FTF Penalty + Interest
Assumptions & References
- Failure-to-Pay penalty rate: 0.5% per month (or partial month) under IRC §6651(a)(2), capped at 25%.
- Failure-to-File penalty rate: 5% per month (or partial month) under IRC §6651(a)(1), capped at 25%; reduced by FTP penalty for the same month.
- Minimum FTF penalty for returns > 60 days late: $485 (indexed for inflation; 2024 figure per Rev. Proc. 2023-34).
- Interest rate: Federal short-term rate + 3% per IRC §6621, compounded daily per IRC §6622. Rate used: 8% (2024).
- IRS adjusts the interest rate each calendar quarter. Verify the current rate at IRS.gov.
- This calculator covers individual underpayment scenarios. Corporate rates and special circumstances (e.g., fraud penalty, accuracy-related penalty) are not included.
- References: IRS Failure-to-Pay Penalty | IRS Interest on Underpayments