IRS Penalties: Types, Rates and How to Get Relief

Every major IRS penalty explained in plain English: failure to file, failure to pay, accuracy, payroll, foreign reporting and more, plus how to request relief.

The Internal Revenue Code contains well over 100 civil penalties, but a handful account for most of what taxpayers see: filing late, paying late, underpaying estimated tax, making errors, missing payroll deposits, and failing to report foreign accounts. Each has its own trigger, its own rate and its own way out.

Use this section to find the penalty on your notice, see how it is calculated, learn how long it keeps growing and find out whether you can reduce or remove it. Two relief options matter most: first-time penalty abatement for taxpayers with a clean recent history, and reasonable cause for those who had a good reason for the problem. Our guide on how to request penalty abatement walks through the process.

For a one-page overview, see IRS penalty types at a glance. Interest is separate from penalties and generally cannot be waived, so paying on time or setting up a payment plan matters even while you contest a penalty.

If you have received a penalty notice, we can review it with you and prepare the request for relief.

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Filing and payment penalties

The most common penalties: late returns, late payments and underpaid estimates.

Failure-to-File Penalty

Late returns cost 5% of unpaid tax per month, up to 25%. See the math, minimum and relief.

Failure-to-Pay Penalty

0.5% of unpaid tax per month, less with a payment plan and more after a levy notice.

Estimated Tax Penalty (Underpayment of Estimated Tax)

Why the IRS charges a penalty for underpaying during the year, and how safe harbors avoid it.

IRS Interest on Unpaid Taxes

How IRS interest is set quarterly, compounds daily, applies to penalties and when it can be abated.

Late Filing When You Are Owed a Refund

No late-filing penalty on a refund return, but a three-year clock can cost you the refund.

Accuracy, fraud and credit penalties

Penalties for errors, understatements, inflated claims and fraud.

Accuracy-Related Penalty

The 20% penalty for negligence, understatements and misstatements, when it climbs to 40% and how to contest it.

Substantial Understatement Penalty

How the IRS decides an understatement of tax is substantial, the 20% penalty and the defenses.

Civil Fraud Penalty

The 75% penalty for fraud, the IRS burden of proof and what to do if one is proposed.

Valuation Misstatement Penalties

When an overstated value or basis triggers a 20% or 40% penalty, with thresholds and defenses.

Erroneous Refund Claim Penalty

A 20% penalty on refund claims that exceed what was allowable, and how to contest it.

Frivolous Return Penalty

The $5,000 penalty for frivolous returns and submissions, plus what the Tax Court can add.

Improper Credit Claims and Credit Bans

How credit disallowance leads to Form 8862, 2-year or 10-year bans and added penalties, and how to respond.

Payroll and business penalties

Deposits, trust fund taxes, S corporation and partnership returns.

Failure-to-Deposit Penalty

The tiered penalty for late or incorrect payroll tax deposits and how to avoid or reduce it.

Trust Fund Recovery Penalty

When owners and officers become personally liable for unpaid payroll taxes, and how to respond.

Employment Tax Penalties Overview

A map of the penalties employers face on payroll taxes, with rates, triggers and where to read more.

S Corporation and Partnership Late-Filing Penalty

How the per-owner monthly penalty for late Forms 1065 and 1120-S works and how to ask for relief.

Dishonored Check Penalty

The IRS penalty for a returned check or payment, how it is figured and how to contest it.

International reporting penalties

FBAR, Form 8938, Form 5471, Form 5472 and Form 3520.

Information return penalties

Forms W-2 and 1099 filed late or incorrectly.

Information Return Penalties (Forms 1099 and W-2)

Per-form penalties for late or wrong 1099s and W-2s, 2026 amounts, caps and relief.

Retirement account penalties

Early withdrawals, excess contributions and missed distributions.

Early Withdrawal Penalty (10% Additional Tax)

When a 10% extra tax applies to early retirement withdrawals, and the exceptions that can avoid it.

Excess Contribution and RMD Penalties

The 6% excess contribution tax, the 25% or 10% missed RMD tax, and how to fix both.

Penalty relief and interest

Reasonable cause, first-time abatement, how to ask, and how interest works.

Facing an IRS penalty?

Relief is available in some situations. We can review your notice and your options.

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