|Tax Topic #206
||2008 Tax Year
Topic 206 - Dishonored Payments
Responding to Taxpayer Inquiries:
My Check did not Clear. What Now?
- At times a taxpayer will call our offices because they received a Letter
608C, stating that their check did not clear the bank. The Internal Revenue
Service does not submit checks a second time for payment. The resubmission
of a payment would be in the hands of the clearinghouse. When a check is not
paid, the clearinghouse frequently resubmits it to the bank.
- We cannot guarantee that the check will be submitted a second time for
payment. It is up to you to determine if you want to wait or make an additional
- If your check is resubmitted and there are sufficient funds in your bank
account to cover it, the check will not be returned to us, and therefore,
you will not be charged with the penalty and interest for an unpaid check.
If the payment is late, however, there may be penalty and interest for the
late payment. We will notify you if a balance becomes due on your account.
How is the Penalty Calculated?
Effective for checks or money orders received after May 25, 2007, section
8245 of the Small Business & Work Opportunity Tax Act of 2007 increased
the bad checks minimum penalty. The amount of the penalty varies from a zero
penalty if the check is less than $5.00, to the amount of the remittance if
the payment is from 5.00 to $24.99. If the amount of the remittance is from
$25.00 to $1,249.99 the penalty is $25.00 and if the amount of the remittance
is $1,250 or more the penalty charge is 2% of the amount of the remittance.
Request Penalty Abatement
You may request penalty abatement by providing a reason why the payment
was dishonored. This request must be made in writing.
Generally bad check penalties are not assessed on checks that have a stop
payment. If a penalty is assessed, you must provide proof of the stop payment.
You must write to the Service Center for this request.
EFT and Payments made by Other Than Check or Money Order
Payments made by EFTPS and payments made by other than check or money order
for which there are insufficient funds are generally not assessed a bad check
penalty. If a penalty is assessed you must write to the Service Center for
abatement. If the payment is late, however, there may be penalty and interest
for the late payment.
Page Last Reviewed or Updated: December 22, 2008
Previous | Index | Next
You can search for information in the entire Tax Prep Help section, or in the entire site. For a more focused search, put your search word(s) in quotes.
Tax Topic Categories | FAQ Categories | Tax Prep Help Main | Home