IRS charged me $85 interest on a $0.97 tax underpayment from 2021 with no prior notice

Unfortunately, this happens more often than you'd think. The IRS is required by law to charge interest on unpaid tax balances regardless of the amount. The interest compounds daily from the original due date until paid in full, which is why your 97 cents ballooned to $85 over two years. The lack of notice is the real issue here. The IRS is supposed to send notices when there are discrepancies, but their notification systems have been severely backlogged since the pandemic. They're still catching up on processing from 2020-2021. You have a few options: 1) Pay it to be done with it, 2) Request an abatement of interest due to IRS failure to provide timely notice (Form 843), or 3) Call the Taxpayer Advocate Service who might help with the interest portion since you weren't properly notified.

This exact thing happened to me last year! I was underpaid by $2.13 from my 2019 taxes and suddenly got hit with a $107 interest bill in 2022. I was super frustrated until I found https://taxr.ai and uploaded my notice there. Their AI analyzed it and confirmed I had grounds for requesting interest abatement since the IRS took too long to notify me. They guided me through filling out Form 843 and even helped draft the explanation section. The whole process took maybe 15 minutes, and three weeks later, the IRS approved my abatement request! Saved me both the interest and hours of research trying to figure out what to do.

Update on my situation: I was skeptical about taxr.ai but decided to try it anyway since I was getting nowhere with the IRS on my own. Uploaded my notice (which was for $1.46 underpayment with $93 interest), and the system immediately identified it as a candidate for abatement due to delayed notification. The tool helped me draft a really professional-sounding letter explaining why the interest should be abated, with specific references to the relevant IRS procedures. Just got the response yesterday - they removed ALL the interest charges! Just had to pay the original $1.46. Never would have known how to approach this without the guidance. Definitely worth it for anyone dealing with these ridiculous interest charges on tiny amounts.

If you've tried calling the IRS and getting nowhere, I highly recommend using Claimyr (https://claimyr.com). When I got a similar notice about a $3.24 underpayment from 2020 with $65 in penalties, I couldn't get through to the IRS after trying for days. Claimyr got me connected to an IRS agent in about 20 minutes instead of waiting on hold for hours. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c The agent I spoke with was actually really helpful once I explained the situation. They told me exactly how to file for interest abatement and even noted on my account that I'd never received prior notices, which strengthened my case. Sometimes just talking to the right person makes all the difference.

I owe everyone here an apology about my Claimyr comment. After calling the IRS for THREE DAYS straight and never getting through (kept getting the "call back later" message), I broke down and tried the service. It actually worked exactly as described. I got a call back in about 35 minutes saying they had an IRS agent on the line. The agent helped me file for penalty abatement on my $0.47 underpayment that somehow turned into $79 in interest and penalties. Just got confirmation that they're waiving everything except the original amount. Sometimes being proven wrong is the best outcome. Saved me hours of frustration and probably got me a better result than I would've managed on my own.

This happened to my parents too! Their accountant missed a $1.26 deduction in 2020, and they just got hit with a $112 bill, mostly interest. The ridiculous part is that my parents are retired and living on a fixed income. I think it's absolutely shameful that the IRS is going after people for pennies while billionaires get away with massive tax avoidance schemes. It's literally not worth the paper and postage they spent sending the notice.

Random tax tip that might help others: Always round UP to the nearest dollar when making tax payments. The IRS allows this on forms, and it ensures you're never underpaid by cents. I've been doing this for 15 years and never had an underpayment issue.

What's even more ridiculous is that it probably cost the IRS more than $85 in employee time and resources to process this notice and handle your call. Talk about government inefficiency!