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. Eective 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 ½%. 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 ling 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 specically 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
specic issue,
– you gave IRS complete and accurate information,
– IRS wrote back to you and gave you a specic
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 led 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 rst
notice we sent you asking for the tax you owe.
10% — deposits made to an unauthorized nancial
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 rst 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 rst required
deposit after a required change to your frequency of
deposits, and (2) you le your employment tax returns
by the due date.
Filing and Paying Late - IRC 6651 — We charge
penalties for ling and paying late when you le your
return late and don’t pay your tax when it is due.
The penalty for ling 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 ½% 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 ling late by the penalty for
paying late for that month.
For returns due before 12/31/2015, if you le 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 ination 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, shermen, 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 Insucient/Late — We charge penalties for
ling and paying late when you le 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 gure 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: Eective for months beginning after December
31, 1999, the failure to pay tax penalty (FTP) for
individuals who le 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 eect.
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 specied information reporting
requirements, including IRC 6109 taxpayer identication
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 le
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 ination 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 le 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 ination
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 ling late if you
didn’t le 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 le 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 Ocer’s Report - IRC 6751(a) —According
to our records, your Examining Ocer 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 le 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 led 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 le the partnership adjustment tracking report
under section 6226(b)(4)(A)(i), then the pass-through
partner can be assessed a failure to le 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 ination
adjustments.
S Corporation Late Filing – IRC 6699 — We charge a
penalty when you le 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 led 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 ination
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 ination
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 led 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 ination
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 specic 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 nancial 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 benets 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
benets 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 Insucient/
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 nancial 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 gure 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 Inucientat/
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 gure 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 rst day
of your applicable semi-weekly period. We apply your
deposits in the date order we receive them. We gure
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 Insucient/
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 rst notice,
interest on the balance due will continue to run at the
standard underpayment rate under IRC 6621(a)(2)
(B) for the rst 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 — Eective 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 le a Form
843, Claim for Refund and Request for Abatement. For
more information on the ling 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 led 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 le 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 led your most recent federal
income tax return. For more information on these Form
843 ling 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
identication 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 rst to tax, then to penalty, and nally 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 aects the amount of your state or local
income taxes, you should le the required state or local
form to report the change.
