DEFINITION of 'IRS Notice 433 - Interest and Penalty Information'
A document published by the Internal Revenue Service that outlines the interest rate applied to overpaid or underpaid taxes, as well as the interest rate applied to the underpayment of estimated taxes. The interest rate can vary from time period to time period, but typically ranges from 4-10%. Federal law requires the IRS to determine the interest rate on a quarterly basis, and interest is typically compounded daily (except on late or underpaid estimated taxes).
BREAKING DOWN 'IRS Notice 433 - Interest and Penalty Information'
Underpaying personal or business taxes can cost you, and the IRS will continue to charge interest until the amount owed is paid in full. Taxpayers are also subject to a late filing fee for missing the filing deadline, as well as a late payment fee. Taxpayers are allowed to appeal interest in certain circumstances, such as mathematical errors and bad advice from the IRS.