Understanding how to navigate IRS penalties and the possibility of their abatement can be crucial for taxpayers facing financial burdens due to penalties and interest on unpaid taxes.
Penalty Abatement: A Closer Look
Penalty Abatement offers a pathway for taxpayers to contest IRS penalties under certain conditions. By demonstrating “Reasonable Cause”—such as illness, family emergencies, natural disasters, or other severe circumstances—it’s possible to have penalties waived and associated interest removed.
What Constitutes Reasonable Cause?
Reasonable cause for penalty waiver includes uncontrollable events like natural disasters, serious illness, or a family member’s death. It’s important to provide thorough documentation to support your claim, as the IRS conducts diligent reviews of these cases.
First Time Penalty Abatement (FTA)
For those with a clean compliance history, the FTA provides relief from penalties for late filings or payments. Eligibility requires a penalty-free record for the three years prior to the incurred penalty, among other criteria.
Statutory Exception
If your penalty was due to incorrect written advice from the IRS, you might qualify for relief under the statutory exception. Essential documentation includes the written request for advice and the IRS’s response.
Working with an Tax Resolution Expert
Tax Resolution Experts (EAs), federally licensed tax experts, can provide valuable assistance in navigating tax laws, managing penalty abatements, and negotiating with the IRS on your behalf.
Summary
Challenging IRS penalties and interest assessments is feasible under certain conditions, with reasonable cause being a critical factor for consideration. If you’re facing penalties, exploring abatement options with an experienced EA can be a strategic move.
Contact us for guidance on managing your tax liabilities and exploring your options for penalty and interest abatement.
