Penalties and Interest

Certain penalties and interest must be specifically addressed when adjusting tax, credits or payments within a module. Document 6209 Section 10, provides penalty and interest policy guidelines, processing codes and additional information from the Office of Servicewide Penalties (OSP) and the Office of Servicewide Interest (OSI). The following websites provide additional penalty and interest information: The Penalties Knowledge Base: The Penalties Knowledge Base (KB) is owned and maintained by the Office of Servicewide Penalties (OSP). It provides guidance, resources, and information for all employees considering assessment and/or abatement of civil penalties. Interest Knowledge Base: The Interest Knowledge Base is owned and maintained by the Office of Servicewide Interest and provides guidance, resources, and information for all employees that consider assessment and/or abatement of interest.

The table below lists penalty types:

Type of Penalty

Transaction Code Used to Assess

Penalty Rate & Information

BMF Impacted Forms

Failure to File (FTF) IRC 6651(a)(1)

Assessment Codes Manual- TC 160 Systemic- TC 166 Abatement Codes Manual- TC 161 Systemic- TC 167

The penalty is 5% of the tax unpaid on the return due date (determined with regard to extensions to file) for each month or part of a month that the return is late, not to exceed 25%. When an income tax return is more than 60 days late, a minimum penalty applies. The penalty amount is the lesser of 100% of the unpaid tax or the minimum penalty for the tax year. See IRM 20.1.2.3.7.4, Minimum Penalty, for more information.