Does filing a tax extension stop the failure-to-pay penalty?

No. Filing Form 4868 extends your deadline to file the return — it does not extend the deadline to pay. Any taxes owed for the 2025 tax year are still due April 15, 2026, regardless of whether you file an extension. If you do not pay by April 15, the failure-to-pay penalty begins accruing at 0.5% per month even if you filed a valid extension.

Does the failure-to-pay penalty stop accruing once I file my return?

No. The failure-to-pay penalty continues to accrue at 0.5% per month on any remaining unpaid balance until the balance is paid in full — even after you file your return. Filing your return stops the failure-to-file penalty but does not stop the failure-to-pay penalty. The only way to stop the failure-to-pay penalty from accruing is to pay the balance in full.

What happens to the failure-to-pay penalty rate if I receive an IRS levy notice?

The failure-to-pay penalty rate increases from 0.5% to 1% per month if you do not pay within 10 days of receiving an IRS notice of intent to levy (a final notice before enforcement). Conversely, the rate drops to 0.25% per month if you have a formal installment agreement in effect. The rate can therefore range from 0.25% to 1% depending on your compliance status.

What is the failure-to-pay penalty?