Responding to Dishonored Payments
If a taxpayer's check or payment fails to clear, they may receive Letter 608C, Dishonored Check Penalty Explained, which informs them that their payment was returned unpaid. The IRS does not resubmit dishonored checks or commercial payment instruments for payment.
However, the clearinghouse, which processes payments, may choose to resubmit the check to the bank. The IRS has no control over this decision, so the taxpayer must decide whether to:
Wait and see if the clearinghouse resubmits the payment
Make a new payment to avoid potential late fees and penalties
If the payment is successfully processed after resubmission and sufficient funds are available, no dishonored check penalty will be applied. However, if the payment is honored after the due date, late payment penalties and interest may apply. The IRS will notify the taxpayer if a balance remains due.
Dishonored Check Penalty Calculation
If a check or other commercial payment instrument does not clear, a penalty applies as follows:
2% of the check amount for payments $1,250 or more
$25 or the full amount of the check (whichever is less) for payments below $1,250
For example:
A $1,500 check results in a $30 penalty (2%)
A $100 check results in a $25 penalty
Requesting Penalty Abatement
The IRS may remove the penalty if the taxpayer can show that they reasonably expected their payment to be honored. To request penalty abatement, taxpayers must:
Submit a written request explaining why the payment failed
Provide any supporting evidence
File the request after receiving Letter 608C
Stop Payment Orders
A dishonored check penalty does not apply if the taxpayer placed a stop payment order on the check or payment instrument.
If a penalty is assessed despite a valid stop payment order, the taxpayer should:
Submit a copy of the stop payment request
Send it with their penalty relief request to the service center listed on Letter 608C