IRS Failure-to-Pay Penalty

IRC 6651(a)(2) - The penalty for not paying your taxes on time

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Uses Published IRS Formulas

0.5%

Standard rate/month

0.25%

With payment plan

After levy notice

25%

Maximum penalty

How the Penalty is Calculated

The IRS charges 0.5% of your unpaid taxes for each month (or partial month) that your payment is late. Unlike the failure-to-file penalty that maxes out after 5 months, the failure-to-pay penalty continues until you pay in full or reach 25%.

1Standard Rate: 0.5% of unpaid taxes per month
2Payment Plan Rate: 0.25% per month (50% savings!)
3After Levy Notice: 1.0% per month (doubled!)
4Maximum: 25% of unpaid taxes

Example Calculations

Standard Rate (0.5%)

Unpaid tax: $10,000
Months late: 12
Calculation: $10,000 x 0.5% x 12
Penalty: $600

With Payment Plan (0.25%)

Unpaid tax: $10,000
Months late: 12
Calculation: $10,000 x 0.25% x 12
Penalty: $300 (Reduced rate with IA)

Tips to Reduce Your Penalty

Set up a payment plan ASAP

Reduces your rate from 0.5% to 0.25% per month - a 50% savings!

Pay as much as you can now

Penalty is calculated on the remaining balance - every dollar paid reduces future penalties.

Request First-Time Abatement

If you have a clean 3-year history, FTA can remove the penalty entirely.

How to Get Penalty Relief

First-Time Abatement (FTA)

Administrative waiver for taxpayers with clean compliance history for the prior 3 years.

Check FTA eligibility →

Reasonable Cause

Circumstances beyond your control: serious illness, natural disaster, death in family, IRS error.

Requires written explanation

Related Penalties

→ Failure-to-File Penalty (5%/month)→ First-Time Abatement Relief

Failure-to-Pay Penalty FAQ

Common questions about the IRS late payment penalty

The failure-to-pay penalty (IRC 6651(a)(2)) is charged when you don't pay your taxes by the due date. It's 0.5% of your unpaid taxes for each month or part of a month that your payment is late, up to a maximum of 25%.

The penalty starts the day after the tax due date (usually April 15) and continues until you pay in full. Even if you file on time, if you don't pay, you'll owe this penalty.

Yes! If you set up an IRS installment agreement (payment plan), the penalty rate drops from 0.5% to 0.25% per month. If you qualify, the reduced rate could lower your total cost over time.

If you receive a notice of intent to levy and don't pay or make arrangements within 10 days, the penalty rate increases from 0.5% to 1.0% per month. Act quickly to avoid this.

When both penalties apply for the same month, the combined rate is capped at 5% total. The failure-to-file penalty (5%) is reduced by the failure-to-pay penalty (0.5%), so you pay 4.5% FTF + 0.5% FTP = 5%.

Yes. First-Time Abatement (FTA) can remove the penalty if you have a clean compliance history for 3 years. Reasonable cause relief is also available for circumstances beyond your control.

Calculate Your Failure-to-Pay Penalty

Get a detailed breakdown and see how a payment plan affects your penalty rate

Start Calculator Check FTA Eligibility

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