Does anyone think it's unfair for the IRS to charge interest?

[GusFring]

It should simply be pay what you owe.

[BlueTsunami2018]

1. Yes.

It’s a usurious practice.

[Sherman A1]

2. I have mixed feelings on the issue

And can see both sides.

[Voltaire2]

3. They only charge if you underpaid by too much.

But yes the rates they charge are ridiculous and if you overpay they don’t pay interest on your loan to them.

I’d love to overpay and get 17%. Sure beats cd rates.

[MosheFeingold]

4. No, but it needs to work both ways

They need to pay you the same interest on money you gave them that was not owed.

Specifically, the money people get in their “tax refund” was money a taxpayer lent to the government interest free.

The way it stands now, if you get a tax refund, that means you did your tax withholding wrong

You should always structure things so you have to make a payment on tax day.

Tax refunds are for suckers.

[brooklynite]

5. They didn't take your money; you gave it to them.

Talk to your employer about withholding, or recalculate your Estimated Taxes.

[DFW]

6. Big sucker here

I get a big tax refund every year. Although I now am taxed mainly in Germany, I did not cancel my withholding in the States because that ALWAYS (this is from the IRS) triggers a massive audit for which I'd have to take weeks off from work here in Europe and be present in the States, and there's nobody that can take my place (been looking for 15 years). Since interest on deposits is practically zero anyway, it's no skin off my back if I'm paid in April or October. When the German taxes come in at higher than the US taxes would be, the only US taxes I have to pay are on things like partnerships, so I get most of my withholding back. Unfortunately, the Germans choose to ignore the double-taxation treaty and want to tax me 50% on the partnership income, too, meaning an effective rate of around 90%. That dispute has been going on since 2012, and my estate will probably still be fighting it out with the children of the German bureaucrats now handling it (Heil Honecker).

And even if the IRS would pay out the same interest they charge, they STILL get you because they get to charge you income tax on the interest they pay you, and you don't get to tax them back on interest you pay them.

Same thing here in Germany with the interest, though they tout the "equal" rate for both. It's fictitious, of course. Theoreticlly, it's 6% if I owe them, and 6% if they owe me, but I get hit with an income tax of 50% if they pay me interest, so they really only end up 3% out of pocket, where, since I pay 50% income tax, I get hit with an effective 12% if I owe them.

[MosheFeingold]

7. That's a little different

Obviously it’s a complicated tax situation.

I’m talking about the average American wage slave.

If an average Joe, one job, gets a big tax refund, then Average Joe screwed up.

The best plan is to write a manageable check each year to the IRS.

As noted above, figure out your withholding to get as close to zero (err in paying a bit) as you can.

[DFW]

11. Agreed--for you people still living in the USA, it makes less sense

I'm sort of out in left field with my oddball tax situation.

[zipplewrath]

8. yes and no

Purely in an "interest" sense, it's an absurd rate, especially by current standards. But what this really is in fact is a "penalty" that is based upon time. i.e. how long have you not paid/under paid the taxes owed.

[Trumpocalypse]

9. Depends on who they are charging

Interest like all taxes should only be changed to those who can afford to pay.

[DeminPennswoods]

10. FTR, this year, penalties are waived

because of the confusion the new tax laws caused with regard to withholding.

Link: https://www.irs.gov/newsroom/irs-waives-penalty-for-many-whose-tax-withholding-and-estimated-tax-payments-fell-short-in-2018

IR-2019-03, January 16, 2019

WASHINGTON — The Internal Revenue Service announced today that it is waiving the estimated tax penalty for many taxpayers whose 2018 federal income tax withholding and estimated tax payments fell short of their total tax liability for the year.

The IRS is generally waiving the penalty for any taxpayer who paid at least 85 percent of their total tax liability during the year through federal income tax withholding, quarterly estimated tax payments or a combination of the two. The usual percentage threshold is 90 percent to avoid a penalty.

The waiver computation announced today will be integrated into commercially-available tax software and reflected in the forthcoming revision of Form 2210 and instructions.

This relief is designed to help taxpayers who were unable to properly adjust their withholding and estimated tax payments to reflect an array of changes under the Tax Cuts and Jobs Act (TCJA), the far-reaching tax reform law enacted in December 2017.

[Ilsa]

13. That's good news. I've been worried that

our withholding has been insufficient. I'll find out soon.

[dalton99a]

12. Heck, the IRS can also take away your passport

If you have seriously delinquent tax debt, IRC § 7345 authorizes the IRS to certify that debt to the State Department for action. The State Department generally will not issue a passport to you after receiving certification from the IRS.

Upon receiving certification, the State Department shall deny your passport application and/or may revoke your current passport. If your passport application is denied or your passport revoked and you are overseas, the State Department may issue you a limited validity passport good only for direct return to the United States.

Seriously delinquent tax debt is an individual's unpaid, legally enforceable federal tax debt totaling more than $51,000 (including interest and penalties)

https://www.irs.gov/businesses/small-businesses-self-employed/revocation-or-denial-of-passport-in-case-of-certain-unpaid-taxes