April 15, 1999 is the deadline for most people to file their 1998 individual income tax return and pay any tax owe. During processing, the return is checked for mathematical accuracy, and the tax due is compared to all amounts paid. If there is any money owed, you will be sent a bill which must be paid in full within 21 calendar days if the balance due is less than $100,000, or 10 business days if the amount due is $100,000 or more. There are several important things you should know about collection notices and bills. Interest is charged on any unpaid tax from the due date of the return until the date of payment. The interest rate is determined every three months and is the federal short-term rate plus 3 percent. Interest is compounded daily. In addition, if you file on time but don't pay all amounts due on time, you'll generally have to pay a late payment penalty of one-half of one percent of the tax owed for each month, or part of a month, that the tax remains unpaid after the due date, up to 25 percent. The one-half of one percent rate increases to one percent if the tax remains unpaid and the IRS issues a notice of intent to levy.

If you owe tax and don't file on time, the penalty is even higher. The combined late-filing and late-payment penalty is five percent of the tax owed for each month, or part of a month, that your return is late, up to 25 percent. And if your return is over 60 days late, the minimum penalty is the smaller of $100 or 100 percent of the tax owed.

You must file your return and pay your tax promptly to avoid interest and penalty charges. Often the funds necessary to pay your tax can be borrowed at a lower effective rate than the combined IRS interest and penalty rate.

To ensure your payment on a bill for tax is credited properly, be sure to return the tear-off stub on your bill and use our return envelope when provided. Please make your check or money order payable to the United States Treasury. Enter the primary Social Security number or employer identification number, the tax year and form number and your telephone number on your check or money order.

The penalties for filing late and paying late may be waived if you have reasonable cause for being late. If you're billed for either penalty and feel you have reasonable cause, send your explanation along with the bill to your service center, or call the IRS at 1-800-829-1040 for assistance. Generally, interest charges may not be waived; they continue to accrue until all assessed tax, penalties, and interest are paid in full.

If you believe there is an error on your notice or bill, write to the IRS office that sent it to you within the time frame given. You should provide photocopies of any records that may help correct the error. Also, you may call 1-800-829-1040 for assistance. If you are correct, we will make the necessary adjustment to your account and send you a corrected notice.

For more information about IRS notices and bills, see Publication 594, Understanding the Collection Process. More information about penalty and interest charges is contained in Publication 17, Your Federal Income Tax. These publications can be downloaded from this site, or ordered by calling 1-800-829-3676.

Tax Topics & FAQs | 1999 Tax Year Archives | Tax Help Archives | Home