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# Handling Tax Penalties and Interest

If your claim is still refused, technically you can sue in U.S. District Court or the Court of Federal Claims for a refund. Practically speaking, however, tax penalties are rarely large enough to justify the time and expense of such a lawsuit.

Getting interest removed from a tax bill can be even more difficult, unless it resulted from an IRS error. But there are some circumstances in which you could be successful:

- Of course, if a tax or penalty is abated, then interest on that amount should be canceled, as well. The IRS computer should do this automatically, but always check a tax bill to verify that the excess amount was removed.
- If interest charges resulted from delays by the IRS, you shouldn't have to pay them. For example, you settled an audit agreeing to pay more tax, but the IRS didn't send you a bill until a year later. That year's interest should be canceled. However, you can't get interest abated if it accumulated while you were challenging an IRS bill in an audit appeal or in court, unless the challenge proves successful.
- If the IRS concludes that you will never be able to pay the tax and interest charges, it may accept less in an Offer in Compromise.
- Tax owed, along with interest and penalties, may be reduced or eliminated through bankruptcy. This should, needless to say, be a last-resort effort.

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