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previous pagePrevious Page: Innocent Spouse Relief (And Separation of Liability and Equitable Relief)
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Rev. date: 09/2008


Dishonored Payments

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dishonored payments

Tele-Tax Topic 206
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Responding to Taxpayer Inquiries:
My Check did not Clear. What Now?
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.
Stop Payments
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.
previous pagePrevious Page: Innocent Spouse Relief (And Separation of Liability and Equitable Relief)
next pageNext Page:  Alternative Filing Methods
 Use previous pagenext page to find additional instances of index items.