Information About Your Notice, 

Penalty and Interest

The interest rates on underpayment and overpayment of taxes are as follows:

Periods

October 1, 2011 through March 31, 2016......................................................................................................................................................3 3

April 1, 2016 through March 31, 2018 ...........................................................................................................................................................4 4

April 1, 2018 through December 31, 2018.....................................................................................................................................................5 5 

January 1, 2019 through June 30, 2019........................................................................................................................................................6 6

July 1, 2019 through June 30, 2020 .............................................................................................................................................................5 5

July 1, 2020 through March 31, 2022 ...........................................................................................................................................................3 3

April 1, 2022 through June 30, 2022 .............................................................................................................................................................4 4

July 1, 2022 through September 30, 2022 ....................................................................................................................................................5 5

October 1, 2022 through December 31, 2022...............................................................................................................................................6 6

January 1, 2023 through September 30, 2023 .............................................................................................................................................7 7

Beginning October 1, 2023............................................................................................................................................................................8 8

Percentage Rates

Underpayment Overpayment

Beginning January 1, 1999, the interest rate we pay on 

any overpayment of taxes, except for corporate taxes, 

is the same as the rate of interest we charge on the 

underpayment of taxes. The law requires us to determine 

these interest rates quarterly. From January 1, 1987 

through December 31, 1998, the interest rate we paid 

on an overpayment of taxes was one percent less than 

the rate of interest we charged on your underpayment 

of taxes. Effective January 1, 1995, we pay a reduced 

rate of interest on corporate overpayments that 

exceed $10,000. This reduced rate is the short-term 

federal interest rate, plus 1⁄2%. We compound interest 

daily, except on late or underpaid estimated taxes for 

individuals or corporations.

If you have an underpayment resulting from a tax 

motivated transaction (for returns due before January 1, 

1990), we charge a special interest rate of 120 percent 

of the underpayment rate. 

We charge interest on penalties for filing late, paying 

late, over or understating valuations, and substantially 

understating the tax you owe.

Also, we charge interest on fraud and negligence 

penalties if the tax returns, including extensions, are 

due after December 31, 1988. For returns due after 

December 31, 1989, the Accuracy-Related Penalty is 

charged interest from the later of the return due date or 

extended return due date.

We continue to charge interest until you pay the 

amount you owe in full. After December 31, 1990, the 

law allows us to charge interest at the underpayment 

rate plus two percent on large corporate underpayments 

of more than $100,000.

About Your Notice

You may call your local IRS telephone number if the 

number shown on your notice is a long-distance call for 

you. All days mentioned in the paragraphs below are 

calendar days, unless specifically stated otherwise.

Removal of Penalties

Reasonable Cause. The law lets us remove or reduce 

the penalties we explain in this notice if you have an 

acceptable reason. If you believe you have reasonable 

cause you may contact us to explain the reason(s), 

establishing you used ordinary business care and 

prudence to comply with your Federal tax obligations but 

were nonetheless unable to do so. We will consider the 

facts and circumstances presented and will let you know 

if we accept your explanation as reasonable cause. This 

procedure does not apply to interest. See Penalty Relief, 

www.irs.gov.

Erroneous Written Advice from IRS

We will also remove your penalty if:

– you wrote to IRS and asked for advice on a 

specific issue,

– you gave IRS complete and accurate information,

– IRS wrote back to you and gave you a specific 

course of action to take or explained what actions 

not to take,

– you followed our written advice in the manner we 

outlined, and

– you were penalized for the written advice we gave 

you.

To have the penalty removed because of erroneous 

written advice from IRS you should:

– complete Form 843, Claim for Refund and Request 

for Abatement,

– request that IRS remove the penalty, and

– send Form 843 to the IRS Service Center where 

you filed your return for the year you relied on 

erroneous advice from the IRS.

The three documents you must attach to your Form 843 

are:

– a copy of your original request for advice from IRS,

– a copy of the erroneous written advice from IRS, 

and

– a notice (if any) showing the penalty we charged 

that you now wish us to remove.

Deposit Penalties - IRC 6656

We may charge penalties if you do not make 

required deposits on time, make deposits for less than 

the required amount or if you do not use EFTPS when 

required. We will not charge penalties if you did not 

willfully neglect to make a proper and timely deposit and 

you have a reasonable cause. For amounts not properly 

or timely deposited, the penalty rates are:

2% — deposits made 1 to 5 days late,

5% — deposits made 6 to 15 days late,

10% — deposits made 16 days or more late, but on or 

before the 10th day after the date of the first 

notice we sent you asking for the tax you owe.

10% — deposits made to an unauthorized financial 

institution, or payments made directly to the 

IRS, or paid with your tax return.

10% — Amounts subject to electronic deposit 

requirements but not deposited using EFTPS.

15% — Amounts still unpaid more than 10 days 

after the date of the first notice the IRS sent 

asking for the tax due or the day on which 

you receive notice and demand for immediate 

payment, whichever is earlier.

The law allows you to tell the IRS where to apply 

your deposits within the tax return period with a 

deposit penalty. You have 90 days from the date of 

the correspondence you received showing the deposit 

penalty to contact the IRS if you want to specify where to 

apply your deposits.

Also, the law allows the IRS to remove the deposit 

penalty if: (1) the penalty applies to the first required 

deposit after a required change to your frequency of 

deposits, and (2) you file your employment tax returns 

by the due date.

Filing and Paying Late - IRC 6651 — We charge 

penalties for filing and paying late when you file your 

return late and don’t pay your tax when it is due.

The penalty for filing late is 5% of the total tax 

assessed that was not paid when due. It is charged each 

month or part of a month the return is late, for up to 5 

months.

The penalty for paying late is initially 1⁄2% of the unpaid 

tax shown on the return. It is charged each month or part 

of a month following the payment due date until the tax 

is paid. The penalty increases to 1% of the unpaid tax for 

any tax that is not paid within 10 days after we issue a 

notice of intent to levy. However, the total penalty cannot 

exceed 25%.

When both penalties are charged for the same month, 

we reduce the penalty for filing late by the penalty for 

paying late for that month.

For returns due before 12/31/2015, if you file the 

return more than 60 days late of the due date, the 

minimum penalty is $135 or 100% of the tax due on your 

return, whichever is smaller. For returns due between 

01/01/2016 and 12/31/2017, the minimum penalty is 

the lesser of $205 or 100% of the tax due. For returns 

due between 01/01/2018 and 12/31/2019, the minimum 

penalty is the lesser of $$210 or 100% of the tax due. For 

returns due between 01/01/2020 and 12/31/2022, the 

minimum penalty is the lesser of $435 or 100% of the 

tax due. For returns due after 12/31/2022, the minimum 

penalty is $450 or 100% of the tax due (the $450 penalty 

amount is subject to annual inflation adjustments).

If you think we should remove or reduce either of 

these penalties, see “Removal of Penalties - Reasonable 

Cause.”

Underpayment or Late Payment of Estimated Tax 

- IRC 6654 — We charge a penalty when you don’t 

estimate your tax and pay the correct amount of tax due.

Individuals, Estates, and Certain Trusts — If you 

expect to owe tax of $1,000 or more for the tax year, 

you must prepay the tax by having tax withheld or by 

making estimated tax payments. We charge a penalty 

when the total tax you pay during the year doesn’t meet 

the requirements of the law. 

The law requires you to pay at least 90% of the tax 

shown on your return for the current year or 100% of the 

tax shown on your return for the prior year, whichever 

is less. Otherwise, you must make estimated tax 

payments each quarter, that is generally 25% of the 

total amount you expect to owe for the year. There 

are special rules for farmers, fishermen, and certain 

higher income taxpayers. Please refer to Publication 

505, Tax Withholding and Estimated Tax, for additional 

information.

Waiver in Certain Cases - IRC 6654(d)(3) — For more 

information on when the estimated tax penalty may be 

reduced or removed, see the instructions for Form 2210 

for your tax year or Publication 505, Tax Withholding and 

Estimated Tax.

Corporations — We charge a penalty for not estimating 

your tax correctly when the corporation owes $500 or 

more in tax, and the total payments made on time are 

less than the required amount.

Notice 746 (Rev. 10-2023) Catalog Number 63146F Department of the Treasury Internal Revenue Service www.irs.gov
2

For tax years beginning after December 31, 1993,

the law requires corporations to pay their estimated tax 

in 4 quarterly payments (unless income is seasonal or 

the corporation used an annualized income method to 

estimate its tax) based on the lesser of 100% of either 

the tax shown on the current year tax return or the prior 

year tax return. Each installment must be at least 25% of 

the tax shown on the return.

The procedure for reasonable cause does not 

apply to corporate estimated tax penalties. For more 

information on when the estimated tax penalty may be 

reduced or removed, see Form 2220 and its instructions 

for your tax year.

Failure to Deposit - IRC 6656(b) — Federal Tax 

Deposits Insufficient/Late — We charge penalties for 

filing and paying late when you file your return late and 

don’t pay your tax when it is due. We use your Record of 

Tax Liability to determine where to apply your deposits. 

We apply your deposits in the date order we receive 

them. We figure the penalty on any tax not deposited, 

deposited late, or not deposited in the correct amounts. 

If you think we should remove or reduce this penalty, 

see “Removal of Penalties — Reasonable Cause.” Also 

see Publication 15, Circular E — Employer’s Tax Guide

or Publication 51, Circular A — Agricultural Employer’s 

Tax Guide for deposit requirements.

Dishonored Check or Other Form of Payment - IRC 

6657 — We charge a penalty when your bank does 

not honor your check or other form of payment. For 

checks or other forms of payment of $1,250 or more, the 

penalty is 2% of the amount of the check or other form 

of payment. For checks or other forms of payment of 

less than $1,250, the penalty is the amount of the check 

or other form of payment, or $25, whichever is less. If 

you think we should remove or reduce this penalty, see 

“Removal of Penalties - Reasonable Cause.”

Fraud - IRC 6663 — We charge a penalty for fraud. The 

penalty is 75% of the tax you didn’t pay due to fraud.

Paying Late - IRC 6651 — We charge a penalty when 

you don’t pay your tax on time. Initially, the penalty is 

1/2% of the unpaid tax for each month or part of a month 

you don’t pay your tax. The penalty can’t be more than 

25% of the tax paid late.

Note: Effective for months beginning after December 

31, 1999, the failure to pay tax penalty (FTP) for 

individuals who file a tax return on or before the due 

date (including extensions), is limited to half the usual 

rate (0.25% rather than 0.5%) for any month in which an 

Installment Payment Agreement is in effect. 

If we issue a Notice of Intent to Levy and you don’t 

pay the balance due within 10 days from the date of the 

notice, the penalty increases to 1% a month. 

If you think we should remove or reduce this penalty, 

see “Removal of Penalties — Reasonable Cause.”

Failure to Comply With Other Information Reporting 

Requirements - IRC 6723 — We charge a penalty when 

you do not comply with specified information reporting 

requirements, including IRC 6109 taxpayer identification 

number (TIN) reporting requirements.

The penalty is $50 for each missing TIN the law 

requires on returns and statements due.

For all missing TINs in any calendar year, the 

penalty can’t be more than $100,000. If you think we 

should remove or reduce this penalty, see “Removal of 

Penalties — Reasonable Cause.”

Filing Late - IRC 6652(c) - Exempt Organizations and 

Certain Trusts. We charge this penalty when you file 

your return late. For Forms 990, 990EZ, and 990PF, the 

penalty is: (1) $20 a day for each day your return is late, 

if your gross annual receipts are equal to or less than 

$1,129,000. The penalty may not be more than $11,000 

or 5% of your gross annual receipts, whichever is less. 

(2) $110 a day for each day your return is late, if your 

gross annual receipts exceed $1,129,000. The penalty 

may not be more than $56,000. For all other forms, the 

penalty is $10 a day for each day your return is late. The 

penalty may not be more than $5,000. These penalty 

amounts are subject to annual inflation adjustment for 

returns due after 2014. If you think we should remove 

or reduce this penalty, see “Removal of Penalties — 

Reasonable Cause.”

Incomplete Return - IRC 6652 — We charge this 

penalty when you don’t file a complete return. For Forms 

990, 990EZ, and 990PF, the penalty is: (1) $20 a day 

for each day your return is incomplete, if your gross 

annual receipts are equal to or less than $1,094,500. 

The penalty may not be more than $10,500 or 5% of 

your gross annual receipts, whichever is less. (2) $105 a 

day for each day your return is incomplete, if your gross 

annual receipts exceed $1,094,500, but the penalty 

may not be more than $54,500. For all other forms, 

the penalty is $10 a day for each day your return is 

incomplete. The penalty may not be more than $5,000. 

These penalty amounts are subject to annual inflation 

adjustment for returns due after 2014. If you think we 

should remove or reduce this penalty, see “Removal of 

Penalties — Reasonable Cause.”

Fraud - IRC 6651(f) — Late Filing Penalty — The law 

allows us to increase the penalty for filing late if you 

didn’t file on time because of fraud. The penalty is 15% 

of the amount of tax you should have reported on your 

tax return for each additional month or part of a month 

you didn’t file your return. The total penalty may not be 

more than 75% of the tax you didn’t pay.

Penalty Removed — We removed the penalty we 

charged you and we are reviewing your account. We will 

let you know the results.

Penalty on Tips - IRC 6652(b) — We charge this 

penalty when you don’t report your tips to your employer. 

The penalty is 50% of the social security or railroad 

retirement tax on the tips you didn’t report. If you think 

we should remove or reduce this penalty, see “Removal 

of Penalties — Reasonable Cause.”

Examining Officer’s Report - IRC 6751(a) —According 

to our records, your Examining Officer gave you a report 

that explained the reason for this penalty.

Late Payment Penalty Removed — We removed the 

late payment penalty we previously charged you.

False W-4 Penalty - IRC 6682 — We charge a $500 

penalty when you make false statement(s) on your 

Form W-4. If you think we should remove or reduce 

this penalty, see “Removal of Penalties — Reasonable 

Cause.”

Partnership Late Filing – IRC 6698 — We charge a 

penalty when you file your partnership return late. The 

penalty is $220 for each person who was a partner at 

any time during the tax year, for each month or part of a 

month that the return was filed late, for up to 12 months. 

If you think we should remove or reduce this penalty, see 

“Removal of Penalties – Reasonable Cause.”

If a pass-through partner of an audited partnership fails 

to timely file the partnership adjustment tracking report 

under section 6226(b)(4)(A)(i), then the pass-through 

partner can be assessed a failure to file penalty under 

section 6698. 

• For returns due after January 1, 2023 the penalty 

amount is $220.

• For returns due between January 1, 2021 and 

December 31, 2022 (without regard to extensions) 

the base penalty rate is $210. 

• For returns due in 2020, the penalty rate is $205 

• For returns due between January 31, 2018 and 

December 31, 2019, the base penalty rate is $200.

• For returns due on or before December 31, 2017, 

the base penalty rate is $195.

These penalty amounts are subject to annual inflation 

adjustments.

S Corporation Late Filing – IRC 6699 — We charge a 

penalty when you file your S Corporation return late. The 

penalty is $220 for each person who was a shareholder 

at any time during the tax year, for each month or part of 

a month that the return was filed late, for up to 12 months. 

If you think we should remove or reduce this penalty, see 

“Removal of Penalties - Reasonable Cause.”

• For returns due after January 1, 2023 the penalty 

amount is $220.

• For returns due between January 1, 2021 and 

December 31, 2022 (without regard to extensions) 

the base penalty rate is $210.

• For returns due in 2020, the penalty rate is $205 

• For returns due between January 31, 2018 and 

December 31, 2019, the base penalty rate is $200.

• For returns due on or before December 31, 2017, 

the base penalty rate is $195.

These penalty amounts are subject to annual inflation 

adjustments.

Filing Incomplete Return – IRC 6698 — We charge a 

penalty when your partnership return is incomplete and 

you don’t provide us the information when requested. 

The penalty is $220 for each person who was a partner 

at any time during the tax year, for each month or 

part of a month, for up to 12 months. If you think we 

should remove or reduce this penalty, see “Removal of 

Penalties — Reasonable Cause.”

• For returns due after January 1, 2023 the penalty 

amount is $220.

• For returns due between January 1, 2021 and 

December 31, 2022 (without regard to extensions) 

the base penalty rate is $210.

• For returns due in 2020, the penalty rate is $205. 

• For returns due between January 31, 2018 and 

December 31, 2019, the base penalty rate is $200.

• For returns due on or before December 31, 2017, 

the base penalty rate is $195.

These penalty amounts are subject to annual inflation 

adjustments.

Filing Incomplete Return – IRC 6699 — We charge a 

penalty when your S corporation return is incomplete and 

you don’t provide us information when requested. The 

penalty is $220 for each person who was a shareholder 

at any time during the year, for each month or part of a 

month the return was filed late, for up to 12 months. If 

you think we should remove or reduce this penalty, see 

“Removal of Penalties — Reasonable Cause.”

• For returns due after January 1, 2023 the penalty 

amount is $220.

• For returns due between January 1, 2021 and 

December 31, 2022 (without regard to extensions) 

the base penalty rate is $210.

• For returns due in 2020, the penalty rate is $205. 

• For returns due between January 31, 2018 and 

December 31, 2019, the base penalty rate is $200.

• For returns due on or before December 31, 2017, 

the base penalty rate is $195.

These penalty amounts are subject to annual inflation 

adjustments.

– Missing Schedules K-1

– Missing Schedule L (Balance Sheets)

– Missing Schedules K-1 TINs (5 or more)

– Missing Schedules K-1 and Schedule L (Balance 

Sheet)

– Missing Schedules K-1 and Schedule K-1 TINs

– Missing Schedule L (Balance Sheet) and Schedule 

K-1 TINs

– Missing Schedules K-1, Schedule K-1 TINs, and 

Schedule L (Balance Sheet)

– Missing Schedule K

– Missing Schedule K and Schedules K-1

– Missing Schedule K and Schedule L (Balance 

Sheet)

– Missing Schedule K and Schedule K-1 TINs (5 or 

more)

– Missing Schedule K, Schedules K-1, and 

Schedules L (Balance Sheet)

– Missing Schedule K, Schedules K-1, and Schedule 

K-1 TINs

– Missing Schedule K, Schedule L (Balance Sheet), 

and Schedule K-1 TINs

– Missing Schedule K, Schedules K-1, Schedule 

L (Balance Sheet), and Schedule K-1 TINs (5 or 

more)

Accuracy-Related Penalty - IRC 6662 — For returns 

due after 12/31/89, we charge a 20% penalty on the 

amount of additional tax attributable to Negligence, 

Substantial Understatement, Substantial Valuation 

Misstatement, Substantial Overstatement of Pension 

Liabilities, or Substantial Estate or Gift Tax Valuation 

Understatement. The penalty is increased to 40% for a 

Gross Valuation Misstatement. 

For returns due before 1/1/90, the applicable 

percentage rate varies with the specific penalty and the 

amount of the increased tax.

Accuracy-Related Penalty on Understatements with 

Respect to Reportable Transactions - IRC 6662(A) — 

For tax years ending after October 22, 2004, we charge 

a penalty for a reportable transaction understatement. 

Generally, the penalty is 20 percent of the reportable 

transaction understatement. The penalty is increased to 

30 percent if the disclosure requirement in IRC section 

6664(d)(3)(A) is not met.
3

Accuracy-Related Penalty on Underpayments 

Attributable to Undisclosed Foreign Financial 

Asset Understatements - IRC 6662(j) — For tax years 

beginning after March 18, 2010, we charge a penalty for 

an undisclosed Foreign Financial Asset. The penalty is 

40% of the portion of any underpayment attributable to 

any undisclosed foreign financial asset understatement.

Accuracy-Related Penalty on Underpayments 

Attributable to Non-economic Substance 

Transactions - IRC 6662(b)(6) - We charge a penalty 

due to a disallowance of claimed tax benefits by reason 

of a transaction lacking economic substance or failing 

to meet the requirements of any similar rule of law. The 

penalty is 20 percent of the portion of the underpayment 

attributable to one or more non-economic substance 

transactions. The reasonable cause exception does 

not apply to any portion of an underpayment that is 

attributable to one or more non-economic substance 

transactions. (For transactions entered into on or after 

March 31, 2010).

Accuracy-Related Penalty on Underpayments 

Attributable to Non-disclosed Non-economic 

Substance Transactions - IRC 6662(i) - We charge 

a penalty when there is a disallowance of claimed tax 

benefits by reason of a transaction lacking economic 

substance or failing to meet the requirements of any 

similar rule of law. The penalty is 40 percent of the 

portion of the underpayment attributable to one or more 

non-disclosed non-economic substance transactions. 

The reasonable cause exception does not apply to 

any portion of an underpayment that is attributable to 

one or more non-disclosed non-economic substance 

transactions. (For transactions entered into on or after 

March 31, 2010). See the Revenue Agent Report for a 

detailed explanation of these penalties.

Ten Percent Penalty for IRC 444 Election - IRC 7519(f) 

— We charge a penalty when we don’t receive the full 

amount of the “required payment” for your IRC section 

444 election on time. The required payment is the value 

of the tax deferral you receive when you change your tax 

year under IRC section 444. 

The penalty is 10% of the part of the payment that 

you didn’t pay on time.

If the required payment is more than $500 for any 

year you made an IRC section 444 election, you must 

make a payment with Form 8752, Required Payment 

or Refund Under Section 7519, by May 15th of the 

following calendar year. Reasonable Cause doesn’t 

apply to this 10 percent penalty for tax years beginning 

on or before August 5, 1997. For tax years beginning 

after August 5, 1997, if you think we should remove 

or reduce this penalty, see “Removal of Penalties — 

Reasonable Cause.”

Failure to Deposit - IRC 6656 — Deposits Insufficient/

Late, Taxes Paid Directly to IRS and Incorrect Record 

of Federal Tax Liability — We charge a penalty when:

– you don’t make your tax deposit on time or in the 

correct amounts,

– you make one or more of your deposits to an 

unauthorized financial institution, pay your tax 

directly to the IRS, pay the tax with your return, or 

– you do not make your deposit(s) electronically as 

the law requires, and 

– your Record of Federal Tax Liability is incomplete 

or illegible, or the liability amounts you report don’t 

equal the net taxes for the tax period.

We figure the penalty on any tax not deposited, 

deposited late, or not deposited in the correct amounts. 

We compute this penalty by averaging your total tax 

liability, and applying your deposits and payments to the 

averaged liabilities in the date order we receive them. 

If you believe we computed the penalty incorrectly, 

please complete the enclosed Form 941 Schedule B, 

Form 945-A, or Form 943-A. For additional details see 

Information on Failure to Deposit Penalty below.

Information on Failure to Deposit Penalty. There is a 

limit to the amount of tax you may pay with your return. 

See the list below.

Form 941 series, Form 943, Form 944, and Form 945 

— You may pay tax of less than $2,500 with your tax 

return.

Form 1042 — You may pay taxes of less than $200 with 

your tax return.

Form 720 — You may pay taxes of $2,000 or less with 

your tax return.

Form 940 — You may pay taxes of $500 or less with 

your tax return.

Form CT-1 — You may pay taxes of less than $2,500 

with your tax return.

If you think we should remove or reduce this penalty, 

see “Removal of Penalties — Reasonable Cause.” Also 

see Publication 15, Circular E — Employer’s Tax Guide, 

or Publication 51, Circular A — Agricultural Employer’s 

Tax Guide, for deposit requirements.

Failure to Deposit - IRC 6656 — Deposits Inufficientat/

Late - One-Day Deposit Rule — We charge a penalty 

when, you don’t deposit your tax using the one-day 

deposit rule for liabilities $100,000 or more during a 

deposit period.

Also, we charge this penalty when the Record of 

Federal Tax Liability on your return is incomplete and 

we are unable to determine if you make your deposits 

on time or in the correct amounts. We figure this penalty 

by averaging the liability you report and distributing it 

equally.

When your average amount of monthly liability is 

$100,000 or more, we place the liability on the first day 

of your applicable semi-weekly period. We apply your 

deposits in the date order we receive them. We figure 

the penalty on any tax not deposited, deposited late, or 

not deposited in the correct amounts. 

For deposits due after December 31, 1989, see 

Failure to Deposit - IRC 6656 — Deposits Insufficient/

Late and Incorrect Record of Federal Tax.

Interest - IRC 6601

Interest — We are required by law to charge interest 

when you do not pay the amount you owe on time. 

Generally, we charge interest from the due date of 

your return (regardless of extensions) until you pay the 

amount you owe in full, including all interest and any 

penalty charges. Interest rates are variable and may 

change quarterly.

Corporate interest — If you are a C corporation, and 

you underpay your tax by more than $100,000 for any 

taxable period, we charge additional interest of 2% 

if the full amount shown as due on a notice isn’t paid 

within 30 days of the notice date. If you don’t pay within 

30 days, interest at the higher rate begins on the 31st 

day after the notice date. Once the additional 2% rate 

begins to apply, we charge the additional interest on all 

underpayments for that type of tax and that tax period 

until you pay your balance in full. 

Additional Interest Charges — If the amount you 

owe is $100,000 or more, please make sure that we 

receive your payment within 10 business days from 

the date of your notice. If the amount you owe is less 

than $100,000, please make sure that we receive your 

payment within 21 calendar days from the date of your 

notice. If we don’t receive full payment within these time 

frames, the law requires us to charge interest until you 

pay the full amount you owe.

Partnership Interest — If the partnership fails to pay 

within the applicable grace period after the first notice, 

interest on the balance due will continue to run at the 

standard underpayment rate under IRC 6621(a)(2)

(B) for the first 10 calendar days after the notice and 

demand date. After that if it is still not paid, interest on 

the balance due will be calculated with an extra 2% rate 

until it is paid in full. 

Section 6621(a)(2)(B) adds 3 percentage points to 

the Federal short-term rate determined under section 

6621(b) for purposes of establishing the interest rate on 

underpayments of tax.

Interest Paid

Beginning with tax year 1991, you can no longer deduct 

interest you paid to the United States Treasury as an 

itemized deduction on your Form 1040, Schedule A.

Interest Reduced

If we reduce interest that you previously reported as 

a deduction on your tax return, you must report this 

reduction of interest as income on your tax return for the 

year we reduce it.

Interest Removed-Erroneous Refund

The law requires us to remove interest up to the date we 

request you to repay the erroneous refund when:

– you didn’t cause the erroneous refund in any way, 

and

– the refund doesn’t exceed $50,000.

– The IRS may remove or reduce interest on 

other erroneous refunds based on the facts and 

circumstances involved in each case.

Annual Interest Netting — Effective January 1, 1987 

through December 31, 1998, the interest rate we paid on 

any overpayment of taxes was 1% less than the interest 

rate we charged on the underpayment of taxes. As of 

January 1, 1999, the overpayment and underpayment 

rates of interest that we pay and charge are the same, 

except for corporate overpayments. If we refund an 

overpayment with interest and we have to increase the 

tax at a later date, we give special consideration to the 

interest on that account.

On the tax increase made after the refund, we will 

charge the lower refund rate of interest (up to the 

amount of the refund) for the same time period that we 

paid interest on the overpayment.

Request for Net Interest Rate of Zero - IRC 6621(d) 

General Rule — If you owe interest to the IRS on an 

underpayment for the same period of time that the IRS 

owes you interest on an overpayment, you may be 

entitled to receive a net interest rate of zero (the same 

rate of interest applies to your underpayment as your 

overpayment).

To receive the net interest rate of zero for interest 

you owed (or paid) the IRS, or interest that we owed (or 

paid) you before October 1, 1998, you must file a Form 

843, Claim for Refund and Request for Abatement. For 

more information on the filing requirements for the Form 

843, see Revenue Procedure 99-43, 1999-47 I.R.B. 579. 

Revenue Procedure 99-43 and Form 843 are available 

at www.irs.gov.

To qualify for the net interest rate of zero, the period 

of limitation for claiming a refund of interest on an 

underpayment and the period of limitation for claiming 

additional interest on an overpayment must have been 

open on July 22, 1998. Generally, the period of limitation 

for claiming a refund of interest on an underpayment is 3 

years from the time you filed your tax return, or 2 years 

from the time you paid the interest, whichever is later. 

The period of limitation to request additional interest on 

an overpayment is 6 years from the date of the refund.

You must file Form 843 on or before the closing date 

of the later statute of limitation period. Mail Form 843 to:

U.S. Mail:

Internal Revenue Service

Net Rate Interest Netting Claim

P.O. Box 9987

Mail Stop 6800

Ogden, UT 84409

Other than U.S. mail:

Internal Revenue Service

Net Rate Interest Netting Claim

1160 West 1200 South

Mail Stop 6800

Ogden, UT 84201

If your request for interest netting involves solely interest 

that you owed the IRS or that the IRS owed you on or after 

October 1, 1998, send Form 843 to the Internal Revenue 

Service Center where you filed your most recent federal 

income tax return. For more information on these Form 

843 filing requirements, see Revenue Procedure 2000-

26, 2000-24 I.R.B. 1. Revenue Procedure 2000-26 is 

available at www.irs.gov.

Status of Your Account

Balance Less than $1 — If the amount you owe is less 

than $1, you do not have to pay it.

Refund Less than $1 — If your refund is less than $1, 

we will send it to you only if you ask for it.

Refund — We will refund your overpayment (plus 

interest when applicable), if you owe no other taxes or 

have no other debts the law requires us to collect.

This notice is not the result of an examination of your 

return. We notify a taxpayer when we select his/her 

return for examination.
4

Action Required on Balance Due 

Accounts

Payment — Please make your check or money order 

payable to the United States Treasury. Write on your 

payment your social security number or employer 

identification number, the tax period and tax form. Mail 

your payment with the bottom part of your notice in the 

enclosed envelope or to the address on the front of your 

notice.

Notice about Partial Payments — Generally, we apply 

your payment first to tax, then to penalty, and finally to 

the interest you owe.

Additional Tax Concerns

Backup Withholding

If you receive interest, dividends or patronage dividend 

income, but you don’t report the income on your tax 

return and you don’t pay the tax due on your tax return, 

you could be subject to a special income tax withholding 

called Backup Withholding. The IRS may request each 

payer of that income to begin withholding at a rate of 

24% if, after we send you four notices over 210 days, a 

balance remains due on your account.

Federal/State Exchange Program

The Internal Revenue Service has agreements with state 

and certain local tax agencies to exchange information 

about federal tax, including increases or decreases. If 

this change affects the amount of your state or local 

income taxes, you should file the required state or local 

form to report the change.