Interest on Underpayments and Overpayments

We charge underpayment interest when you don't pay your tax, penalties, additions to tax or interest by the due date. The underpayment interest applies even if you file an extension.

If you pay more tax than you owe, we pay interest on the overpayment amount.

Underpayment and overpayment interest rates vary and may change quarterly. Changes don't affect the interest rate charged for prior quarters or years. See Quarterly Interest Rates for more information.

Underpayment Interest

Understand when we start and stop paying interest on underpayments and how you can pay your balance, apply for a payment plan and reduce or dispute interest you owe.

Stop and Start Dates for Underpayment Interest

In general, we charge interest on underpayments starting on the due date of the amount you owe:

  • Tax is due on the return due date, even if you file an extension.
     
  • Penalties and additions to the tax due dates vary by penalty type:
    • Failure to File penalty, also called the delinquency penalty, is due on the return due date, or extended return due date.
    • Failure to Pay, estimated tax and Dishonored Check penalties are due on the date we send you a notice or assess the penalty.
    • Accuracy-related penalties are due on the return due date, or extended return due date..
  • Interest is due as it accrues.

If you received a notice, you will not be charged interest on the amount shown if you pay the amount you owe in full on or before the "pay by" date.

Pay Your Balance

Pay your balance in full to stop underpayment interest from accumulating daily.

Apply for a Payment Plan

If you can't pay the full amount of your taxes on time, pay what you can now and apply for a payment plan.

Reduce Interest You Owe

If you're able to reduce the amount of the tax or penalties you owe by filing an amended return or qualifying for penalty relief, we'll automatically reduce the related interest. We don't remove or reduce interest for reasonable cause or as first-time relief.

Dispute Interest You Owe

We may reduce the amount of interest you owe only if the interest is applied because of an unreasonable error or delay by an IRS officer or employee.

To dispute interest due to an unreasonable error or IRS delay, submit Form 843, Claim for Refund and Request for Abatement PDF or send us a signed letter requesting that we reduce or adjust the overcharged interest. For more information, see Instructions for Form 843 PDF.

Overpayment Interest

Understand when we start and stop paying interest on overpayments and how you can dispute insufficient interest paid.

Stop and Start Dates for Overpayment Interest

In general, we pay interest on the amount you overpay starting from whichever is later:

  • Tax return filing due date
  • Late filed tax return received date
  • Date we get your return in a format we can process or
  • Date the payment was made

We stop paying interest on overpayments on the date we refund your overpayment (and interest) or offset it to an outstanding liability.

Exception: We have administrative time (typically 45 days) to issue your refund without paying interest on it.

Dispute Insufficient Interest Paid

If you think we underpaid interest owed to you on refunds or credits you're eligible for, you can file an informal claim or complete and send us Form 843 PDF for us to consider allowing additional overpayment interest.

To request we consider a claim for insufficient interest paid, you must make your request within 6 years of the date of the overpayment.

Get Help

For help with interest, call the phone number on your notice or letter, use telephone assistance or contact your local Taxpayer Assistance Center.

Law and Regulations