IRS Issues Reminder About Penalties for Unpaid Estimated Taxes in 2025

The Internal Revenue Service (IRS) has issued a reminder about the penalties that apply to taxpayers who fail to make quarterly estimated tax payments when due. The final quarterly estimated tax payment for the 2024 tax year was due on January 15, 2025, which means that any taxpayers who haven’t paid are now delinquent. If you are one of these taxpayers, what do you need to know? New Jersey IRS lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group, explains.

Penalties for Unpaid Estimated Taxes Begin to Accrue Immediately

For taxpayers who fail to make estimated tax payments when due, penalties begin to accrue immediately. Interest begins to accrue immediately as well—including interest on the penalties owed. While the IRS may send you a notice informing you that you owe the Underpayment of Estimated Tax by Individuals Penalty, waiting until you receive this notice from the IRS can both increase your liability and increase your risk of facing an audit or investigation.

How much do you owe in penalties? The IRS calculates penalties for delinquent estimated tax payments based on three factors:

• The amount of the underpayment;
• The period when the underpayment was due; and,
• The current quarterly interest rate for federal tax underpayments.

When paying these penalties voluntarily, it is critical to ensure that you calculate your liability correctly—as failing to pay the full amount you owe will result in penalties continuing to accrue. A New Jersey IRS lawyer can help with this calculation. An experienced lawyer will be able to help you determine if you qualify for any form of relief as well.

Seeking Relief from Penalties for Unpaid Estimated Taxes

Individual taxpayers who failed to make estimated tax payments for the 2024 tax year may be eligible for various forms of relief. Some of the options that may be available include:

• Seeking Removal or Reduction of Penalties Based on an “Unusual Circumstance” – Under current IRS rules, penalties for delinquent estimated tax payments “may be removed or reduced if the underpayment is the result of a casualty, local disaster, or other unusual circumstance when it would not be fair to impose the penalty.”
• Seeking a Reduction Based on Other Factors – The IRS allows qualifying individual taxpayers to apply for a reduction of estimated tax penalties if they are recently retired, recently disabled, or had varying levels of income throughout the year.
• Disputing the Penalty – Taxpayers who relied on incorrect written advice from the IRS can dispute their liability for estimated tax penalties, provided that the IRS’s incorrect advice “was not the result of material omissions or misinformation in your written request for advice.”

If you cannot afford to pay what you owe, you may also qualify to submit an offer in compromise, or you could be eligible to seek another form of relief that is not specific to the penalties for delinquent estimated tax payments. Regardless of which option makes the most sense for your specific circumstances, you will want to take appropriate action as soon as possible.

Contact New Jersey IRS Lawyer Kevin E. Thorn

To learn more about the options for resolving estimated tax payment delinquencies with the IRS, contact us today. Call 201-842-7696 or contact us confidentially online to request an appointment with New Jersey IRS lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group.