Interest and certain penalties will continue to accrue during the Appeals process and during any subsequent Appeals to the Courts on any amount not paid. Interest on a deficiency, can become a significant portion of the total amount due, especially where a case is open for years. Interest begins running on the due date for the year in issue and the IRS has three years from the filing date to adjust the amount of tax due.

A taxpayer can stop the running of interest by paying the asserted deficiency or by depositing all or part of the amount at issue. A deposit stops the running of interest and does not deprive the Tax Court of jurisdiction. However, the taxpayer will not receive interest on the deposit even if he prevails in Tax Court.

March 25, 2014

Do interest and penalties stop while appeal is pending?

Interest and certain penalties will continue to accrue during the Appeals process and during any subsequent Appeals to the Courts on any amount not paid. Interest […]