When a taxpayer fails to meet their federal tax obligations to the Internal Revenue Service (IRS), interest will accrue on the amount of the tax obligation that remains outstanding. However, there are a number of mitigating circumstances in which a taxpayer can seek to avoid or abate interest on a tax obligation. Interest on tax
irs interest abatement
Calculating IRS Interest
The Internal Revenue Service (IRS) method for calculating interest has changed over time. Currently, the method for calculating interest is described by the IRS as “daily compounding of interest (i.e., interest computed on interest).” Internal Revenue Service, Internal Revenue Manual, Part 20.2.6.1, available at https://www.irs.gov/irm/part20/irm_20-002-006r.html. In other words, each day interest accrues on the principal