IRS Data Study
IRS Failure to Pay Penalty by the Numbers: 2026 Data Study
Headline finding: the IRS failure to pay penalty was the single most common penalty on individual and estate/trust income tax returns in fiscal year 2025. The IRS assessed about 24.3 million of them, totaling roughly $12.1 billion — and abated (reduced or removed) about 3.1 million, worth about $5.0 billion.
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Key findings (FY2025)
- The failure-to-pay penalty was the most common penalty charged on individual and estate/trust income tax returns in fiscal year 2025.
- The IRS assessed about 24.3 million failure-to-pay penalties that year.
- Those penalties totaled about $12.1 billion — roughly $500 per penalty on average.
- The IRS abated about 3.1 million of these penalties, worth about $5.0 billion.
- That means roughly 13% were removed or reduced by count, and about 41% by dollar value.
- The penalty grows at 0.5% of the unpaid tax per month, capped at 25% of the balance.
The numbers in one table
| Metric (FY2025) | Figure |
|---|---|
| Failure-to-pay penalties assessed | ~24.3 million (~$12.1 billion) |
| Failure-to-pay penalties abated | ~3.1 million (~$5.0 billion) |
| Average penalty assessed | ~$500 |
| Share abated | ~13% by count · ~41% by dollars |
Source: IRS Data Book FY2025, Table 4-2 (civil penalties assessed and abated, individual and estate/trust income tax). Counts and dollars are rounded; "derived" rows are simple ratios calculated from the IRS figures above.
What this means in plain English
If you owe the IRS and didn't pay in full by the deadline, you are not an outlier — you are part of a very large crowd. More than 24 million failure-to-pay penalties in a single year tells you this is the most ordinary tax problem there is. The system charges the penalty automatically the moment a balance goes unpaid.
The second number is the hopeful one. The IRS removed or reduced about 3.1 million of these penalties in FY2025 — roughly $5.0 billion worth. People get this penalty taken off all the time, usually because they asked and they qualified. The penalty is not permanent, and it is one of the most forgivable charges the IRS issues.
Notice the gap between the two percentages: about 13% of penalties were abated by count, but about 41% by dollars. In plain terms, the larger penalties were more likely to be reduced — which makes sense, because the bigger the balance, the more it's worth the time to file for relief and the more often a valid reason exists.
How the IRS failure to pay penalty grows
The failure-to-pay penalty is 0.5% of your unpaid tax for each month or part of a month the balance stays unpaid. It keeps stacking until it hits a ceiling of 25% of the unpaid tax. Interest is charged separately and on top of that.
Here's a concrete example. Say you owe $10,000 and pay nothing:
- Month 1: 0.5% = $50 penalty.
- After 6 months: about $300.
- After 10 months: about $500.
- The penalty maxes out at $2,500 (25% of $10,000) after roughly 50 months.
Two details matter. If you set up an installment agreement, the rate generally drops to 0.25% per month while the plan is active. And after the IRS issues a final notice of intent to levy and you still don't respond, the rate can rise to 1% per month. You can model your own numbers with our IRS penalty and interest calculator.
How the penalty gets removed
The 3.1 million abatements in the data didn't happen by accident. There are two main ways to get the failure-to-pay penalty removed:
- First-Time Abatement (FTA). If you have a clean compliance record for the prior three years — no penalties, returns filed, and you're current or in a payment plan — the IRS may remove the penalty just for asking. This is the most common route and is often granted by phone.
- Reasonable cause. If something beyond your control kept you from paying — serious illness, a death in the family, a natural disaster, records lost in a fire — you can request relief by explaining what happened and providing documentation.
You can read the IRS's own rules at Failure to Pay Penalty and Penalty Relief. For a step-by-step walkthrough, see our guide to writing an IRS penalty abatement letter, and our overview of penalty abatement as a relief option. One caution: eligibility always depends on your specific facts, and no outcome is guaranteed — anyone promising they'll erase your penalty before reviewing your history is selling you something.
Methodology & source
All figures in this study come directly from the IRS Data Book, Table 4-2 (Civil Penalties Assessed and Abated, by Type of Tax and Type of Penalty), fiscal year 2025. We used the rows for individual and estate/trust income tax. Counts and dollar totals are rounded for readability; the "derived" figures (average penalty and share abated) are simple ratios we calculated from the IRS's published totals. We invented no statistics. A fiscal year runs October 1 through September 30, so FY2025 covers October 2024 through September 2025. Penalty mechanics (the 0.5% monthly rate and 25% cap) reflect long-standing IRS rules.
Cite this study
Researchers, journalists, and writers are welcome to cite these figures. Please use this attribution and link back:
Clarity Tax Relief. "IRS Failure to Pay Penalty by the Numbers: 2026 Data Study." Clarity Tax Relief IRS Help Center, June 26, 2026. IRS Failure to Pay Penalty by the Numbers: 2026 Data Study
Frequently asked questions
How common is the IRS failure to pay penalty?
Very common. In fiscal year 2025 the failure-to-pay penalty was the single most common penalty charged on individual and estate/trust income tax returns. The IRS assessed about 24.3 million of them in that one year.
How much is the IRS failure to pay penalty?
The penalty is 0.5% of your unpaid tax for each month or part of a month it stays unpaid, up to a maximum of 25% of the unpaid amount. Across all taxpayers in fiscal year 2025, these penalties totaled about $12.1 billion, which works out to roughly $500 per penalty.
How often does the IRS remove the failure to pay penalty?
In fiscal year 2025 the IRS abated — reduced or removed — about 3.1 million failure-to-pay penalties on individual and estate/trust income tax returns, totaling about $5.0 billion. That is roughly 13% of these penalties by count and about 41% by dollar value.
How do I get the failure to pay penalty removed?
Two main paths exist. First-Time Abatement may remove the penalty if you have a clean compliance history for the prior three years. Reasonable-cause relief may apply if circumstances beyond your control — such as serious illness, a natural disaster, or other hardship — kept you from paying. Eligibility depends on your specific facts, and no outcome is guaranteed.
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.