An unopened IRS letter rarely gets cheaper with age. Some IRS penalties and interest increase month after month; others become substantially larger after certain deadlines, and interest can continue accumulating on unpaid taxes and many assessed penalties. The IRS also makes an important distinction between filing a return and paying the tax, meaning taxpayers who can’t afford the entire bill may still limit some damage by filing on time. Waiting because you’re afraid of what you owe can therefore turn a manageable tax problem into a much more expensive one. These seven penalties show why dealing with an IRS issue sooner is usually financially smarter than hoping it disappears.
