When you cash the bonds (at a bank) you’ll receive the full face value of those bonds — and maybe even more as the interest piled up. That’s great. Then you’ll get a tax statement for the amount of interest earned. It will be added to your ordinary income that year — and may push you into an income level that would increase the cost of your Medicare Part B, so check with your tax preparer. But this is a nice problem to have — now you’ll have cash. Don’t worry about the taxes. At least there is no STATE tax on the interest you earned.
And I don’t think the Treasury department — busy as it is these days — is going to come after you for a penalty!