With Inflation Sky High, Taxpayers Reconsider Payment Options

Taxpayers often have questions about how to pay off their tax debts. But with inflation and interest rates creeping higher, those questions are becoming more frequent, and the standard answers don’t always apply.

To make a good decision, it’s important to understand how the IRS applies interest and penalties to tax bills.

Penalties

Two common penalties for individual taxpayers are Failure to Pay (FTP) and Failure to File (FTF). The FTP penalty is 0.5% of the unpaid taxes for each month the tax remains unpaid. The FTF penalty is much higher—5% of the unpaid taxes for each month that the ...