Rev. date: 09/2008
Responding to Taxpayer Inquiries:
My Check did not Clear. What Now?
- At times a taxpayer will call our offices because they received a Letter 608C, stating that their check did not clear the bank. The Internal Revenue Service does not submit checks a second time for payment. The resubmission of a payment would be in the hands of the clearinghouse. When a check is not paid, the clearinghouse frequently resubmits it to the bank.
- We cannot guarantee that the check will be submitted a second time for payment. It is up to you to determine if you want to wait or make an additional payment.
- If your check is resubmitted and there are sufficient funds in your bank account to cover it, the check will not be returned to us, and therefore, you will not be charged with the penalty and interest for an unpaid check. If the payment is late, however, there may be penalty and interest for the late payment. We will notify you if a balance becomes due on your account.
How is the Penalty Calculated?
Effective for checks or money orders received after May 25, 2007, section 8245 of the Small Business & Work Opportunity Tax Act of 2007 increased the bad checks minimum penalty. The amount of the penalty varies from a zero penalty if the check is less than $5.00, to the amount of the remittance if the payment is from $5.00 to $24.99. If the amount of the remittance is from $25.00 to $1,249.99 the penalty is $25.00 and if the amount of the remittance is $1,250 or more the penalty charge is 2% of the amount of the remittance.
Request Penalty Abatement
You may request penalty abatement by providing a reason why the payment was dishonored. This request must be made in writing.
Generally bad check penalties are not assessed on checks that have a stop payment. If a penalty is assessed, you must provide proof of the stop payment. You must write to the Service Center for this request.
EFT and Payments made by Other Than Check or Money Order
Payments made by EFTPS and payments made by other than check or money order for which there are insufficient funds are generally not assessed a bad check penalty. If a penalty is assessed you must write to the Service Center for abatement. If the payment is late, however, there may be penalty and interest for the late payment.