Penalties & Interest
Can IRS Interest Be Waived? The Honest Answer (2026)
The short answer: can IRS interest be waived? Almost never. Interest on tax you actually owe is set by law, and the IRS has very little power to remove it. It can be reduced only in narrow cases — when it grew from an IRS error or delay, when it was charged on a penalty that gets abated, or when you settle the whole balance.
⏱ Why timing matters: IRS interest compounds daily and keeps growing every day a balance sits unpaid. There's no notice deadline to "waive" interest — but the sooner you pay or set up an arrangement, the less interest you'll ever pay. Each month of delay adds to a balance that's already growing.
Why IRS interest is so hard to waive
Penalties and interest feel like the same thing on your notice, but the IRS treats them very differently. Penalties are something the IRS charges — and because it charges them, it can also forgive them. Interest is different. Interest is required by law (Internal Revenue Code section 6601) whenever tax is paid late.
That single fact is why interest abatement is rare. The IRS doesn't have free rein to wipe it out just because you fell on hard times, lost a job, or had a medical emergency. Those reasons can help you remove penalties — but not the interest on the tax itself.
Interest also compounds daily, and the rate is reset every quarter. If you want the full breakdown of how the rate works, see our guide to the IRS interest rate on back taxes. The short version: the meter never stops, which is exactly why acting early saves you the most.
When IRS interest actually can be reduced
"Almost never" is not "never." There are real, legal ways interest comes off a balance. Here are the situations that count:
- The interest was charged on a penalty that gets removed. When the IRS abates a penalty, it also removes the interest that was charged on that penalty. The interest on your underlying tax stays — but the penalty's share of interest goes away with it.
- An unreasonable IRS error or delay caused the interest. Under section 6404(e), if an IRS employee's mistake or unreasonable delay in a "ministerial or managerial" act made your interest grow, you can ask the IRS to abate that portion. This is discretionary and hard to win — you must point to a specific IRS act, not just a slow process.
- A math, processing, or posting error on the IRS's side. If the IRS applied a payment to the wrong year, misposted a credit, or simply miscalculated, the interest tied to that mistake can be corrected.
- A federally declared disaster or combat-zone relief. The IRS sometimes suspends interest and penalties for taxpayers in declared disaster areas during the relief period.
- You settle the whole balance. An accepted Offer in Compromise or certain other resolutions settle tax, penalties, and interest for one figure — which can mean you pay less interest than the full amount.
Notice what's not on this list: "I couldn't afford to pay." That's the most common reason people ask, and it's the one reason that almost never works for interest.
How penalty relief lowers what you owe
Here's the practical move most people miss. You usually can't waive interest directly — but you can often remove penalties, and when a penalty disappears, so does the interest charged on it.
Two main paths exist:
- First-time penalty abatement. If you have a clean compliance history for the prior three years and you've filed (or arranged to file) everything, the IRS can remove the failure-to-pay or failure-to-file penalty for one period — automatically, just for asking.
- Reasonable-cause relief. Serious illness, a death in the family, a natural disaster, or records destroyed beyond your control can justify removing penalties if you can document the circumstances.
To see how large these charges grow, read how big IRS penalties get and the difference between the failure-to-file and failure-to-pay penalties. The failure-to-pay penalty alone runs 0.5% of the unpaid tax per month — removing it, plus its interest, can be a meaningful chunk of your balance.
A quick worked example
Say you owe $20,000 in tax and have let it sit for a year. A rough picture might look like this:
- Tax: $20,000 — set by law, not waivable.
- Failure-to-pay penalty: roughly $1,200 (0.5% per month for 12 months) — may be removable through first-time or reasonable-cause relief.
- Interest on the tax: a few percent of $20,000, compounding daily — generally not waivable.
- Interest on that penalty: removed automatically if the penalty is abated.
In this example, the penalty and its interest are the realistic targets. The interest on the $20,000 tax keeps running until the balance is paid. That's why the strongest "interest strategy" is almost always to pay or resolve the balance faster — not to fight the interest itself.
How to respond, step by step
- Confirm what you actually owe. Log into your IRS online account and look at how the balance splits between tax, penalties, and interest. You can't target relief until you know the breakdown.
- Go after penalties first. Request penalty relief by phone, in writing, or with the proper form. Removing a penalty also removes its interest.
- If an IRS error or delay caused interest, file Form 843, Claim for Refund and Request for Abatement, and lay out the specific dates and the IRS act that caused the problem.
- Stop the meter. Pay what you can, or set up a plan, so interest stops growing on the part you can clear. Every dollar paid is a dollar that stops accruing daily interest.
- If the balance is large or you can't pay, ask an experienced tax professional whether a settlement or hardship status fits — that may reduce the total, including interest, more than chasing the interest line item ever could.
And a warning: if a company guarantees it can "waive your IRS interest" before looking at a single document, walk away. Anyone promising to settle a tax debt for pennies on the dollar — or to erase interest the law requires — before reviewing your finances is selling you something.
Not sure which relief fits your balance?
Send us your notice. An experienced tax professional will review whether penalty relief, an IRS-error claim, or a settlement could lower what you owe — free, confidential, no pressure.
Can IRS interest be waived? Your questions, answered
Can IRS interest ever be removed completely?
Only in narrow cases. Interest can be removed when it was charged on a penalty that gets abated, when it grew because of an unreasonable IRS error or delay, or when the IRS made a math or processing mistake. Interest on tax you genuinely owe is set by law and is almost never waived just because you couldn't pay.
Does first-time penalty abatement also remove interest?
Partly. First-time penalty abatement removes the penalty itself, and the IRS then removes the interest that was charged on that specific penalty. But the interest on the underlying tax balance stays in place. So you save the penalty plus its interest — not all the interest you owe.
How do I request interest abatement from the IRS?
You file Form 843, Claim for Refund and Request for Abatement, and explain why the interest was caused by an IRS error or delay — with dates and documentation. Interest abatement under this rule is discretionary and hard to win, so the request needs to show a specific IRS mistake, not just that the balance grew.
Can a tax relief company get my IRS interest waived?
No one can waive interest the law requires. Anyone promising to erase your IRS interest before reviewing your facts is selling you something. What an experienced tax professional can do is check whether penalty relief, an IRS-error claim, or settling the balance applies to your situation, which may lower the total you pay.
Does an Offer in Compromise stop interest?
An accepted Offer in Compromise settles the whole liability — tax, penalties, and interest — for one agreed amount, so it can effectively reduce the interest you pay. Interest still accrues on the balance while the offer is pending, and you only benefit if your finances genuinely qualify, which the IRS verifies.
This guide is general information, not tax or legal advice for your specific situation. Eligibility for IRS programs depends on individual facts and circumstances; no outcome is guaranteed.