What It Means To Receive Notice Of A Dishonored Payment From The IRS

Some taxpayers who have submitted their returns and payments are surprised when they receive Letter 608C, or a Dishonored Check Penalty statement. Having a check (or electronic payment) returned can have significant repercussions for taxpayers, so if you attempted to pay your taxes, but recently received notice that the payment wasn’t honored, you should speak with an experienced Florida unfiled tax lawyer as soon as possible to avoid the accrual of penalties and fees.

What is a Dishonored Payment?

A dishonored payment notice is sent to taxpayers when there weren’t enough funds in a taxpayer’s account to cover a payment made via check or electronic payment. These letters notify the taxpayer that his or her payment wasn’t honored and will be returned to the bank unpaid. It’s important to note that the IRS does not resubmit checks, or any commercial payment instrument for that matter. Instead, the debt will be considered unpaid until the taxpayer addresses it.

Penalties for a Dishonored Payment

Besides being frustrating, having a payment dishonored by the IRS can result in the accrual of significant penalties and fines. The specific penalties that a taxpayer will be assessed is calculated based on the amount of the bad check or electronic payment. For payments less than $1,250, for instance, a taxpayer will need to pay $25 or the amount of the payment, whichever is less. For higher debts, however, a taxpayer will end up being fined an amount equal to two percent of the payment amount. The IRS also charges interest on these penalties, which will continue to accrue until the balance is paid in full. In most cases, the only way to stop future penalties and interest from accruing is to send some form of payment to the IRS. Fortunately, there are a few exceptions to this general rule.

Requesting Penalty Abatement

The IRS won’t charge a penalty for a dishonored payment if the taxpayer can prove that:

• The payment was made in good faith; and
• He or she had reasonable cause to believe that there were enough funds in the account to cover the payment.

To qualify for this exception, taxpayers must comply with a series of filing requirements, including:

• Sending a written statement to the IRS explaining why the penalty should be reconsidered;
• Submitting documents showing that there was enough money in the account to cover the payment, such as a bank statement or letter from the bank; and
• Signing, dating, and mailing the statement and documents to the address on the notice.

For help determining whether you could qualify for penalty abatement for a dishonored check, please call our office today.

Set Up a One-on-One Consultation

If you received notice of a dishonored payment from the IRS, you could be facing significant penalties and fines. Please call dedicated Florida and nationwide unfiled tax lawyer Ronald Cutler, P.A. at 386-490-9949 to learn more about handling a dishonored payment. Initial consultations are conducted on a one-on-one basis and are offered free of charge, so don’t hesitate to reach out to our legal team by phone or online message today.

Resource:

irs.gov/taxtopics/tc206