Chapter 09

Penalties and Interest

How penalties and interest grow an IRS balance, which facts matter for relief, and how to verify an account before requesting an adjustment.

Reviewed for federal tax accuracy by Calculus Tax

Reviewed August 21, 2026

Calculus Tax is a related tax-services provider. Editorial review does not create a professional-client relationship or make Calculus Tax the reader's representative before the IRS.

Balance growth

Why does my IRS balance keep growing?

Interest and applicable penalties can continue to accrue on unpaid tax, so the balance may change until the account is paid or adjusted.

Compare the notice or transcript by tax year and separate assessed tax, penalties, interest, payments, and credits. A payment plan may spread payments but does not necessarily stop all additions to the balance. If the assessment or payment history is wrong, use the IRS correction or appeal channel rather than relying on an estimated payoff amount.

Tax transcripts and accounts Options if you cannot pay

IRS: Penalties IRS: Interest

Penalty relief

Can IRS penalties be removed?

Sometimes. Penalty relief depends on the penalty, the tax period, the taxpayer’s history, and whether the facts meet an IRS relief standard.

First identify the penalty type and the tax period. Possible relief standards can include reasonable cause, administrative relief for qualifying taxpayers, or other specific provisions. Provide a clear explanation and supporting records, and distinguish penalty relief from interest relief: removing a penalty does not automatically remove all interest charged on that penalty.

Penalty relief Penalty abatement calculator

IRS: Penalty relief

Administrative relief

Who may qualify for first-time penalty abatement?

Eligibility is not automatic; the IRS generally looks at the penalty type, filing and payment history, and whether required returns and balances are current or arranged.

Check the IRS requirements for the specific penalty and tax period. A clean compliance history can matter, but it does not guarantee approval. Gather filing, payment, notice, and reasonable-cause records before requesting relief, and confirm whether the request should be made by phone, correspondence, or the process stated on the notice.

Read the canonical guide Penalty relief guide

IRS: First-time penalty abatement

Interest relief

Can IRS interest be reduced or removed?

Interest relief is narrower than penalty relief and usually depends on an IRS error, unreasonable delay, or a specific statutory or administrative rule.

Separate interest caused by unpaid tax from interest connected to a penalty. Review the account history and identify whether an IRS error or delay affected the calculation. Do not assume a successful penalty-abatement request removes every related interest charge; ask for the specific adjustment supported by the account records and applicable rule.

Tax account transcript Dispute IRS liability

IRS: Interest

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