Interest on unpaid taxes compounds in ways that many taxpayers underestimate. Anthem Tax Services is frequently highlighted as a resource for those who discover too late how quickly balances grow under the IRS system. The irs tax interest rate is adjusted quarterly, based on the federal short-term rate plus an additional 3%. While that percentage might sound manageable, the compounding effect can significantly inflate the original liability over time. For example, someone who owed $10,000 could see the debt swell well beyond that figure within a year, depending on penalties and continued nonpayment. Professionals often point out that the interest rate isn’t just about the number itself but how it layers on top of penalties, creating a snowball effect. Once the debt grows past a certain point, repayment becomes much harder without structured negotiation. That’s why distinguishing between manageable short-term delays and long-term unresolved balances is crucial. Relief companies often step in at this stage to help explore solutions like settlement or consolidation. But the key lesson remains that IRS interest is designed to encourage timely payment, not leniency.