Rev. date: 09/2008
Responding to Taxpayer Inquiries:
My Check did not Clear. What Now?
- At times a taxpayer will call the Internal Revenue Service because they received a Letter 608C, entitled, Dishonored Check Penalty Explained, 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 whether to wait and see if the clearinghouse resubmits it to the bank, or whether you should 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 the Internal Revenue Service, 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?
When checks or money orders the IRS receives for payment of taxes do not clear the bank, the bad check penalty generally equals 2 percent of the amount of the check or money order. If, however, the amount of the check or money order is less than 1,250.00, the penalty is $25.00 or the amount of the check or money order, whichever is less. Thus, if the amount of the check or money order is from $25.00 to $1,249.99, the penalty is $25.00.
Request Penalty Abatement
The Internal Revenue Service can abate the bad check penalty in certain circumstances. You may request penalty abatement by providing a reason why the payment was dishonored. This request must be made in writing and should only be done after you have received notification of a penalty assessment.
Generally, bad check penalties are not assessed on checks for which a stop payment order has been requested. If a penalty is assessed, please send a copy of the stop payment request along with your request for penalty relief to the address on the notice.
Electronic Funds Transfer and Payments made by Other Than Check or Money Order
Payments made through the Electronic Federal Tax Payment System (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, please respond in writing to the address on the notice you received regarding the penalty. If the payment is made late there may be a penalty for failure to deposit and/or failure to pay tax timely.