Erroneous claim for refund or credit

The Erroneous Claim for Refund or Credit penalty applies if you submit a claim for refund or credit of income tax for an excessive amount and a reasonable cause does not apply. This IRC 6676 penalty provision was amended by the One, Big, Beautiful Bill Act and will also apply to erroneous claims for refund or credit of employment taxes filed after July 4, 2025.

How you know you owe the penalty

We send you a notice or letter if you owe an Erroneous Claim for Refund or Credit penalty. For more information, see Understanding your IRS notice or letter.

How we calculate the penalty

In cases of erroneous claim for refund or credit, a penalty amount is 20 percent of the excessive amount claimed.

• An “excessive amount” is defined as the amount of the claim for refund or credit that exceeds the amount allowable for any taxable year.
• Even though your refund has been held and not refunded to you while your tax return is being audited, the amount of the claim may be assessed an erroneous claim for refund or credit penalty if there is not reasonable cause.
• The penalty will not apply to any disallowed portion of the claim for refund or credit that is subject to  an Accuracy-related penalty or Fraud penalty.

Interest on a penalty

We charge interest on penalties.

The date from which we begin to charge interest varies by the type of penalty. Interest increases the amount you owe until you pay your balance in full. For more information about the interest we charge on penalties, see Interest.

Pay a penalty

You can pay using one of our safe, quick and easy electronic payment options.

Pay your penalty in full to stop future penalties and interest from adding up.

Apply for a payment plan

If you can't pay the full amount of your taxes or penalty on time, pay what you can now and apply for a payment plan.

Remove or reduce a penalty

We may be able to remove or reduce some penalties if you acted in good faith and can show reasonable cause for why you weren’t able to meet your tax obligations. By law we cannot remove or reduce interest unless the penalty is removed or reduced.

For more information, see penalty relief.

Dispute a penalty

If you disagree with the amount you owe, you may dispute the penalty.

If a notice or letter we sent you has instructions or deadlines for disputing the penalty, you must follow those instructions.

If you didn’t receive a notice or letter, get telephone assistance.

Have this information when you call or reply to the notice or letter:

• The notice or letter we sent you
• The penalty you want us to reconsider
• For each penalty, a signed explanation of why you think we should remove it along with supporting documents

Avoid a penalty

You can avoid a penalty by filing your tax return accurately and on time and paying your tax by the due date. If you can’t pay your tax by the due date, you can apply for a payment plan.

Law and regulations

Erroneous Claim for Refund or Credit - 26 U.S. Code § 6676