Responding to Taxpayer Inquiries:
My check (payment) did not clear. What now?
- At times, taxpayers will call the IRS because they received a Letter 608C, Dishonored Check Penalty Explained, stating that their payment was dishonored and returned from a financial institution (bank) unpaid. When this letter is sent out to the taxpayer, the check is determined to be unpaid and the IRS will not resubmit it for payment. The IRS does not submit checks or other commercial payment instruments a second time for payment.
- When a check or other commercial payment instrument is not paid, however, the clearinghouse frequently resubmits it to the bank. The clearinghouse, not the IRS, determines whether or not to resubmit a payment.
- We cannot ensure that the check or other commercial payment instrument will be submitted a second time for payment by the clearinghouse. It is up to you to decide whether to wait and see if the clearinghouse resubmits it to the bank, or whether you should make an additional payment.
- If your check or other commercial payment instrument is resubmitted and there are sufficient funds in your bank account to cover it, the check will be paid and not returned to the IRS, and therefore, you will not be charged the unpaid check penalty. If the payment is honored after the due date, however, you may be charged interest and a penalty for the late payment. We will notify you if a balance becomes due on your account.
How is the penalty calculated?
When a check or other commercial payment instrument the IRS receives for payment of taxes does not clear the bank, a penalty generally applies that equals 2 percent of the amount of the check or other commercial payment instrument. If, however, the amount of the check or other commercial payment instrument is less than $1,250, the penalty is $25 or the amount of the check or other commercial payment instrument, whichever is less. Thus, if the amount of the check or other commercial payment instrument is between $25 and $1,250, the penalty is $25.
Requesting Penalty Abatement
The IRS can abate this penalty in certain circumstances. You may request penalty abatement by explaining why the payment was dishonored. This request must be made in writing and should only be done after you have received the Letter 608C notifying you of a penalty assessment.
Generally, this bad check penalty is not assessed on checks or other payment instruments for which a stop payment order has been requested. If a penalty is assessed, please send a copy of the stop payment request along with your request for penalty relief to the service center address listed on your notice.
Page Last Reviewed or Updated: October 10, 2016