IRS Penalty Guide
Failure to Pay Penalty (FTP)
IRC §6651(a)(2)
This guide explains the Failure to Pay Penalty (FTP), how the IRS calculates it, and what relief options are available — including First Time Abate and reasonable cause.
Penalty Rate
0.5% of unpaid tax per month or part of a month, up to 25%
Maximum: 25% of unpaid tax
First Time Abate Eligible
The Failure to Pay Penalty (FTP) is eligible for First Time Abate (FTA) relief under IRM 20.1.1.3.3.2.1. Taxpayers with no penalties in the prior 3 tax years may qualify for full penalty removal.
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Relief Options for This Penalty
First Time Abate (FTA)
Reasonable Cause
Statutory Exception
How This Penalty Is Calculated
Example Calculation
If you owe $10,000 and pay 6 months late: $10,000 × 0.5% × 6 = $300 penalty. With an approved installment agreement, the rate drops to 0.25% per month.
Several relief programs may apply to the Failure to Pay Penalty (FTP). Upload your notice to see which ones fit your situation.
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Frequently Asked Questions
How is the failure to pay penalty calculated?
The penalty is 0.5% of the unpaid tax balance for each month or partial month the tax remains unpaid, up to a maximum of 25%. The rate increases to 1% per month if the IRS issues a Notice of Intent to Levy and payment is not received within 10 days.
Does the rate decrease with an installment agreement?
Yes. If you have an approved installment agreement, the FTP penalty rate is reduced to 0.25% per month for any month the agreement is in effect.
How does FTP interact with the failure to file penalty?
When both penalties apply in the same month, the FTF penalty is reduced by the FTP amount. The combined rate remains 5% per month for the first 5 months, then 0.5% per month (FTP only) after that.
Facing the Failure to Pay Penalty (FTP)? Check your eligibility for relief.
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Does an extension of time to file also extend the payment deadline?
No. An extension to file is not an extension to pay. Tax is due on the original filing deadline (typically April 15). Any unpaid balance after that date accrues the FTP penalty and interest.
Can I get the penalty removed if I set up a payment plan?
Setting up a payment plan reduces the rate but does not eliminate the penalty. However, you can separately request First Time Abate or reasonable cause relief for the accrued FTP penalty.
What if I paid on time but the IRS did not receive it?
Provide proof of timely payment (bank statement, cancelled check, electronic confirmation). If the IRS confirms the payment was made on time, the penalty should be removed.
See If You Qualify to Wipe the Failure to Pay Penalty (FTP)
Upload your IRS notice and our tool checks the exact IRM provisions that apply to the Failure to Pay Penalty (FTP).
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See which penalties may qualify and the amount at issue on your notice. The IRS makes the final decision.