Tax question: If I short pay my Federal Return, does the IRS impose a fine or a fee as penalty?

[ThomasM · Accepted solution]

Yes, if you make a partial payment, then the remainder will be subject to a "failure to pay" penalty of one half of one percent per month (based on amount outstanding) -- with a max penalty of 25% -- plus interest at the current rate of 4% annually.

If you request an installment agreement in order to make monthly payments, you won't be charged penalty (only interest) but there's a fee to set it up.

Here's a link to the IRS payment plans page: https://www.irs.gov/individuals/payment-plans-installment-agreements.