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IRS.gov Website
Rev. date: 01/01/2011


Dishonored Payments

Tax Topic 206
rule
Responding to Taxpayer Inquiries:
My Check (Payment) did not Clear. What Now?
How is the Penalty Calculated?
When a check or other commercial payment instrument the IRS receives for payment of taxes does not clear the bank, a penalty generally applies that equals 2 percent of the amount of the check or other commercial payment instrument. If, however, the amount of the check or other commercial payment instrument is less than $1,250.00, the penalty is $25.00 or the amount of the check or other commercial payment instrument, whichever is less. Thus, if the amount of the check or other commercial payment instrument is from $25.00 to $1,249.99, the penalty is $25.00.
Request Penalty or other commercial payment instrument Abatement
The Internal Revenue Service can abate this 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.
Stop Payments
Generally, this penalty is not assessed on checks or other payment instruments 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.