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IRS.gov Website
Rev. date: 11/16/2015


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, the penalty is $25 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 between $25 and $1,250, the penalty is $25.
Requesting Penalty Abatement
The IRS can abate this penalty in certain circumstances. You may request penalty abatement by explaining why the payment was dishonored. This request must be made in writing and should only be done after you have received the Letter 608C notifying you of a penalty assessment.
Stop Payments
Generally, this bad check 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 service center address listed on your notice.