• Skip to content
  • Skip to primary sidebar
  • Skip to footer

Long Island Tax Resolution Services

  • Home
  • About
  • Blog
  • Free Consultation
  • Testimonials
  • En Español
  • Representation
  • Notices
  • Wage Garnishment
  • Back Taxes Help
  • Unfiled Returns
  • Levy
  • .
  • .
  • Call us at: 631-244-1650
You are here: Home / IRS TAX PROBLEMS / Penalties and Interest / IRS Penalties: Why, What, When and Who

September 3, 2012 by James Grennen

IRS Penalties: Why, What, When and Who

Why Does The IRS Issue Penalties?

The IRS imposes tax penalties for many reasons. Actually there are over 148 IRS penalties. Although usually monetary in nature, penalties involving forfeiture of property or even jail time are not uncommon. Some of the more common reasons that taxpayers face IRS penalties include:IRS Penalities

  • Late filing penalties. If you fail to file your tax return on or before the due date the penalty assessed is based on the amount of tax owed as well as how long the return remains unfiled.
  • Late payment penalties. Even if the taxpayer files on time the IRS may impose a penalty if payment of taxes is delayed for any reason. As with the late filing penalty, this penalty will be vary depending on the amount owed.
  • Accuracy related penalties. If taxes owed on a tax return are adjusted upward by the IRS at a later date the taxpayer may be subject to this type of penalty. The penalty can range from 20{bf3da7fb6a4d0e0e3790d09a79b980fc065e33e2f3a2d49280f7e95b82f4982b} to 40{bf3da7fb6a4d0e0e3790d09a79b980fc065e33e2f3a2d49280f7e95b82f4982b} of taxes owed due to substantial inaccuracies for reasons like the following: negligence of rules, understatement of tax, various valuation misstatements and pension liability overstatement.
  • Trust Fund Recovery Penalty. This penalty is imposed against employers who neglect to withhold income and social security taxes paid to their employees and then forward this income to the government.

What Is IRS Penalty Abatement?

The IRS may remove or reduce a penalty or interest imposed upon a taxpayer. This process is known as penalty abatement and is achieved by many taxpayers seeking this type of tax relief. The taxpayer must be prepared to have a legitimate reason for making the request and must have their case well documented and substantiated.

Positives are that abatement can sometimes reduce the total tax debt to a manageable level. Also, the IRS does not charge a fee as they do in other circumstances.

Negatives are that it can be tedious (including documenting your basis for the claim). And, in the end, you still owe the original taxes.

When Are IRS Penalties Abated?

The IRS grants penalty abatement for the following reasons:

  • Reasonable cause (examples: death or serious illness in the family or prolonged unemployment),
  • IRS fault (examples: an error or delay that led to a correction)
  • Administrative waiver (example: government directive to provide natural disaster relief).
  • Statutory exception (change in the Internal Revenue Code mitigates a liability).

The IRS resolves less than half of penalty abatement cases in favor of the taxpayer. Interest abatement cases are even more difficult to have resolved favorably. While any IRS level can grant abatement, it is the supervisory level that grants most favorable resolutions.

Who Should The Taxpayer Seek Advice From?

IRS personnel are trained to say to reject these types of requests as a matter of due course. Relying on the help of a tax problem expert, can increase significantly the chances of obtaining a favorable resolution. An experienced certified Enrolled Agent or tax attorney will be able to frame your case in the best possible light for favorable resolution.

 

Filed Under: Penalties and Interest Tagged With: IRS Penalties

Learn About Us

  • About Us
  • Enrolled Agents
  • Groups and Associations
  • Our Tax Resolution Process
  • Seven Reasons to Hire Us

About James Grennen

James Grennen is a Certified Tax Resolution Specialist who is expert in solving IRS tax problems and New York State tax problems. He has decades of financial tax experience in addition to being an IRS Enrolled Agent.

Reader Interactions

Primary Sidebar

Search Form

DOWNLOAD A FREE COPY OF THE ESSENTIAL TAX RESOLUTION GUIDE

Cover of the Guide

Your information is safe with us.

Attorney Plus Program

Long Island Tax Resolution Services is Not a Law Firm of Attorney Practice


Please click here to see why our Attorney Plus Program is the smartest way to resolve your IRS or State tax problems.

Be Smart Check List

IRS On Enrolled Agents :

"The Enrolled Agent is the most expansive license that the IRS grants a tax professional.

An Enrolled Agent has earned the privilege of representing taxpayers before the IRS.

Enrolled Agents are generally unrestricted as to which taxpayers they can represent, what types of tax matters they can handle and the IRS offices before which they can practice."


IRS Publication 4693A
(A Guide to the Enrolled Agent Program)

Man trapped by tax

NYS Tax Warrants: What Every Taxpayer Needs to Know

Man thinking. New York State Tax Problems FAQ

10 Frequently Asked Questions about New York State Tax Problems

Top 4 NY State Department of Taxation Collection Actions

Top 4 NY State Department of Taxation Collection Actions and What to Do About Them

Offer In Compromise (OIC): Tips To Getting Yours Accepted

The Penalties for Failing to File a Return or Pay Taxes

Footer

LITRS Company Profile

Long Island Tax Resolution Services specializes in providing affordable solutions to both individuals and small businesses experiencing back tax problems. These are either IRS tax problems or State tax problems.

Resources

Our Process

Privacy Policy

Recent Posts

  • NYS Tax Warrants: What Every Taxpayer Needs to Know
  • 10 Frequently Asked Questions about New York State Tax Problems
  • Top 4 NY State Department of Taxation Collection Actions and What to Do About Them
  • Offer In Compromise (OIC): Tips To Getting Yours Accepted
  • The Penalties for Failing to File a Return or Pay Taxes

Tags

Innocent Spouse Relief IRS Back Taxes IRS Bank Levy IRS Hardship irs notices IRS Offer IRS Penalties IRS Plans IRS Tax Relief IRS Tax Services IRS Wage Garnishment Tax Debts Tax Returns

Locations

Head Office (map above)
    80 Orville Drive, Suite 100Bohemia, NY 11716
    Phone: (631) 244-1650
    Fax: (720) 294-1650
Manhattan Location
    5 Penn Plaza, 23rd FloorNew York, NY 10001
2nd Long Island Location
    626 Rexcorp PlazaWest Tower, 6th FloorUniondale, NY 11556
Westchester Location
    50 Main St, 10th FloorWhite Plains, NY 10606

© Copyright 2014 - 2017 Long Island Tax Resolution Services · All Logos & Trademark Belongs To Their Respective Owners·