What Is the Penalty for Not Paying IRS Taxes?

Taxpayers incur a substantial penalty when IRS taxes are left unpaid. In this blog post, attorney Robert Schaller explores the different type of penalties assessed by the IRS for not paying IRS taxes. Plus, the attorney will explore steps that offer IRS tax relief.

IRS Penalty for Unpaid Taxes

It is essential for taxpayers to understand that tax penalties and interest can quickly compound, making the resolution of unpaid taxes a pressing matter. Ignoring these financial obligations can lead to a significant increase in the overall debt and may result in further legal actions by tax authorities.

Firstly, it should be noted that unpaid taxes, if left unresolved, can result in the imposition of various penalties and interest by tax authorities. These charges are applied to the outstanding tax amount to encourage timely payment and deter future non-compliance.

IRS Failure to Pay Penalty

One of the potential penalties that may be imposed by the IRS is the failure to pay penalty. This penalty applies when a taxpayer does not remit the full amount of taxes owed by the tax filing deadline. Similar to the failure-to-file penalty, it also increases over time as the unpaid taxes accumulate.

In addition to the IRS penalty for not paying taxes, interest is also applied to the outstanding tax amount. The interest accrues daily and is calculated based on the unpaid tax balance. As a result, the longer the back taxes go unpaid, the more interest will accrue, making the total amount owed significantly higher.

IRS Failure to File Penalty

Another possible penalty is the failure-to-pay file. This penalty is incurred when a taxpayer does not submit their tax return by the designated deadline. The amount of this penalty is typically based on a percentage of the unpaid taxes and increases the longer the tax return remains unfiled.

Repayment Strategies to Consider

To address the issue of the IRS penalty for not paying taxes, it is crucial for taxpayers to take proactive steps. Seeking the guidance of a tax professional or a qualified tax attorney can be highly beneficial in understanding the best course of action for resolving unpaid taxes.

One option to consider is an installment agreement with the tax authorities. An installment agreement allows taxpayers to pay off their unpaid taxes over time in regular, manageable installments. This approach can help alleviate the financial burden and prevent the imposition of more severe penalties.

In certain cases of financial hardship, taxpayers may be eligible for an offer in compromise (OIC). An OIC allows taxpayers to settle their tax debt for less than the full amount owed. However, it is essential to meet specific criteria and provide detailed financial information to qualify for this option.

In addition to installment agreements and offers in compromise, taxpayers may also explore the option of requesting penalty abatement. Penalty abatement is a process that allows taxpayers to request the removal of certain penalties if they can demonstrate reasonable cause for the failure to file or pay taxes on time.

Taxpayers should keep in mind that resolving unpaid taxes and associated penalties requires open communication with the tax authorities. Being transparent about one’s financial situation and willingness to comply can lead to more favorable outcomes when negotiating a resolution.


Failing to address unpaid taxes can lead to potential penalties and interest that quickly accumulate. The imposition of failure-to-file and failure-to-pay penalties, along with daily accruing interest, can significantly increase the overall tax debt. To address these financial obligations effectively, taxpayers should consider options such as installment agreements, offers in compromise, or requesting penalty abatement. Seeking professional advice and maintaining open communication with tax authorities are vital steps in resolving unpaid taxes and achieving financial stability. Contact Attorney Bob Schaller to help.