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If I Owe More Taxes After an IRS Audit, Do I Have to Pay Interest on It?
- The IRS chooses which tax returns to audit based on several criteria. Once the IRS has selected your return for examination, you are notified by mail. The audit is conducted either by mail, onsite at an IRS office or at your location. You can represent yourself or have independent representation during the audit. If the audit results in additional tax due, taxes plus interest are assessed. You can agree and pay, or appeal the claim.
- If you agree with the IRS assessment, you sign a form and pay the additional taxes plus interest. The IRS calculates interest from the later date of either the tax return's original due date or when the return was filed. If you pay the assessment within 10 days, or 21 days if the assessment is less than $100,000, no additional interest is due. If you are due a refund, the IRS will pay you interest on the refund.
- Once you pay the additional taxes plus interest, you can ask the IRS for an interest abatement, or waiver and refund of the interest paid. The IRS normally denies interest cancellations except in cases of delay or error caused by the IRS. This includes the IRS giving you incorrect written advice or unduly delaying an audit or other event that led to an interest assessment. This request should be directed to the local IRS Service Center and should include all documentation needed to support the claim.
- If you disagree with the IRS audit assessment, you are offered mediation services with an IRS appeals officer to resolve the dispute. The IRS also issues a letter notifying you of your right to appeal the assessment within 30 days. If the dispute remains unresolved, the IRS will send you another letter or notice of deficiency. You will have 90 days from this notice date to file a petition with the Tax Court.