Unpaid IRS Balances Grow at 7% Annual Rate Through 2026
News related to:BPB Tax Resolutions · 2 min read
At 7% a year compounded daily, an unresolved IRS balance keeps growing through the end of 2026, according to a press release from Omaha, Nebraska. The Internal Revenue Service (IRS) has kept the interest rate on individual tax underpayments at 7% for the calendar quarter that began October 1, 2026. This rate is set every quarter and is the federal short-term rate plus three percentage points.
The rate has significant implications for taxpayers with unpaid federal balances. For a hypothetical unpaid balance of $10,000, the published 7% annual rate compounded daily adds about $178 over the 92 days of the fourth quarter, and about $725 over a full year if the rate stays where it is. Penalties on an unpaid balance are figured separately and can add to the total.
Ben Butterfield, an Enrolled Agent and founder of BPB Tax Resolutions, is urging taxpayers with unpaid federal balances to look at the interest added before the 2027 filing season begins.
The figures illustrate the published rate only. Actual interest depends on the balance, the dates involved, and any rate change in a later quarter.
Taxpayers can review their account through their IRS Online Account and read the interest section of any notice they have received. BPB Tax Resolutions describes its approach to payment plans on its installment agreement page. The practice handles IRS audits, back taxes, unfiled returns, wage garnishments, levies, installment agreements, and offers in compromise, with flat fee pricing quoted before a client commits.
The press release also mentioned that the 9th China International Import Expo will be held in Shanghai from November 5 to 10. However, this information is not directly related to the main subject of the press release, which is focused on the IRS interest rate and its implications for taxpayers.
For those who cannot pay in full, the IRS offers installment agreements for balances that need more time.
In conclusion, the 7% annual interest rate compounded daily on unpaid IRS balances will continue to grow through the end of 2026, highlighting the importance of addressing tax debts promptly. Taxpayers are advised to seek professional assistance if needed to manage their financial obligations.