{"id":12143,"date":"2025-04-11T11:00:35","date_gmt":"2025-04-11T15:00:35","guid":{"rendered":"https:\/\/www.jdavidtaxlaw.com\/?p=12143"},"modified":"2025-04-13T21:17:26","modified_gmt":"2025-04-14T01:17:26","slug":"tax-day-2025-what-happens-if-you-dont-pay-the-irs-by-april-15","status":"publish","type":"post","link":"https:\/\/www.jdavidtaxlaw.com\/blog\/tax-day-2025-what-happens-if-you-dont-pay-the-irs-by-april-15\/","title":{"rendered":"Tax Day 2025: What Happens If You Don\u2019t Pay the IRS by April 15"},"content":{"rendered":"\t\t
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Failing to pay your federal taxes by the April 15, 2025 deadline, also known as Tax Day, triggers IRS penalties right away. The <\/span>failure-to-pay penalty<\/span> is <\/span>0.5% of the unpaid tax<\/span><\/a> for each month (or part of a month) that the balance remains unpaid, capped at 25% of the tax due. This rate can <\/span>increase to 1% per month<\/span> if the IRS has sent a final notice of intent to levy and you still haven\u2019t paid within 10 days. On the other hand, if you <\/span>filed your return on time and set up an installment payment plan<\/span>, the IRS reduces the failure-to-pay penalty to <\/span>0.25% per month<\/span> during the payment plan.<\/span><\/p>

Importantly, the failure-to-file penalty for not filing your return is much steeper than the failure-to-pay penalty. It\u2019s typically 5% of the unpaid tax per month (or part of a month) late, up to a maximum of 25%. If you also failed to file by the deadline, these two penalties can stack. In fact, after five months, the combined penalty rate can hit its cap (a maximum of 47.5% of the tax \u2013 22.5% from late filing plus 25% from late payment). The IRS also imposes a <\/span>minimum late filing penalty<\/span><\/a> if your return is over 60 days late \u2013 for 2025, this minimum is the lesser of $510 or 100% of the tax owed<\/span><\/p>

Mounting Interest on Unpaid Taxes<\/span><\/h2>

In addition to penalties, the IRS charges interest on any unpaid tax balance starting from the April 15 due date. This interest accrues daily and is compounded daily on the accumulating balance (tax plus penalties and prior interest). The interest rate isn\u2019t static, it\u2019s adjusted quarterly based on federal short-term rates. For example, in early 2025 <\/span>the interest rate on underpayments is <\/span>7% per year<\/span><\/a>, compounded daily<\/span>. This means each day interest is calculated on the previous day\u2019s balance (which includes prior interest), causing your debt to grow faster the longer it remains unpaid.<\/span><\/p>

IRS Notices and Collection Timeline<\/span><\/h2>

If the April 15 deadline passes without full payment, the IRS will initiate its collection process. Here\u2019s what typically happens over time if you don\u2019t pay:<\/span><\/p>

  1. Initial Notice <\/span><\/h3><\/li><\/ol>

    The IRS usually sends an initial <\/span>CP14 notice<\/span><\/a> (Notice of Tax Due and Demand for Payment) within a few weeks after processing your return. This letter shows the balance owed (tax, plus any immediate penalties\/interest) and demands payment, usually <\/span>giving you 21 days to pay in full<\/span>. This is essentially your first bill from the IRS for the unpaid tax.<\/span><\/p>

    1. Reminder Notice <\/span><\/h3><\/li><\/ol>

      If the tax remains unpaid, about 6 weeks later the IRS sends a <\/span>CP501<\/span><\/a>, which is a follow-up reminder that you still have an outstanding balance. Interest and penalties will have continued accruing in the interim.<\/span><\/p>

      1. Second Notice<\/span><\/h3><\/li><\/ol>

        Next, a <\/span>CP503<\/span><\/a> may arrive, labeled \u201cImmediate Action Required.\u201d It\u2019s a more urgent notice that you still owe and need to address the debt. Ignoring this can lead to more serious action. At this stage, <\/span>if you\u2019re unsure how to proceed, the IRS and tax professionals strongly advise addressing the issue or seeking professional help<\/span> rather than continuing to ignore the debt. This is often when people reach out to <\/span>J. David Tax Law <\/span><\/a>for guidance. We help clients understand their options and take action before the situation escalates.<\/span><\/p>

        1. Intent to Levy<\/span><\/h3><\/li><\/ol>

          After previous notices have gone unanswered, the IRS will send a <\/span>CP504<\/span><\/a>, usually about <\/span>5 weeks after the last notice<\/span>. This notice is an <\/span>\u201cUrgent Intent to Levy\u201d<\/span> warning. It not only tells you that the IRS intends to levy (seize) certain assets, often it specifically mentions intent to levy your state tax refund but it also signifies that you\u2019re dangerously close to more aggressive collection actions. Interest and the failure-to-pay penalty are still adding up each month.<\/span><\/p>

          1. Final Notice <\/span><\/h3><\/li><\/ol>

            If you still don\u2019t resolve the debt, the IRS will issue a <\/span>Final Notice of Intent to Levy<\/span> (often sent as <\/span>Letter 1058<\/span><\/a> or LT11) and notice of your right to a hearing. This is the last warning: it gives you <\/span>30 days<\/span> to pay or make arrangements before the IRS can proceed with levying your income or assets. It also informs you of your right to request a Collection Due Process hearing within that 30-day window. <\/span>Failing to act at this point allows the IRS to start <\/span>seizing property<\/span><\/a>.<\/span><\/p>

            Escalating Enforcement: Liens, Levies, and Passport Revocation<\/span><\/h2>

            If you still don\u2019t resolve the tax debt after the final notice, the IRS has the legal authority to <\/span>enforce collection<\/span>:<\/span><\/p>