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Penalties and Interest

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IRS Penalty Abatement – Reduce or Eliminate IRS Tax Penalties

Failure to pay your taxes on time will result in penalties and interest that can contribute greatly to an already negative financial condition. Filing tax returns and paying taxes on time are the best ways to avoid large penalties. However, if you are struggling with genuine hardship financial, the IRS may reduce or waive penalties based on reasonable cause.

IRS penalty abatement

Penalties accrue on unpaid taxes depending on the severity of the offense and the amount. If you’re a small business owner who has neglected to pay taxes, you’re going to have a much higher liability than a working class citizen who works for someone else. These penalties exist simply to encourage paying taxes on time, so neglecting taxes will only make matters worse. You can’t escape them either way.

That’s not to say that people who face genuine financial hardship aren’t excused. Despite what many say, the IRS is not so cruel. Citizens who have come upon unfortunate times can appeal to the IRS and have penalties waived or reduced.

Reasons for reducing tax penalties are as follows:

  • Death, serious illnesses or unavoidable circumstances
  • Living in an officially designated disaster area
  • Statutory exceptions or special cases
  • IRS errors
  • Financial hardship situations

In cases like the above, the IRS cannot reject penalty abatement. Be sure to include all relevant information and craft a proper penalty abatement request. This is best accomplished with the help of a certified and experienced tax professional.

Certified tax professionals understand the nuances involved with the IRS tax code. They also know exactly how to coax the IRS into granting penalty abatement. Certified members of our qualified team at Long Island Tax Resolution Services will work to reduce or waive tax your penalties. The IRS will only entertain requests which considered worthy. We are experts are communicating the high points of your case to the IRS, ensuring your genuine hardship is given full consideration. Furthermore, we know that every case and taxpayer is unique, so our customized tax relief process guarantees the best results – at the lowest costs.

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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.

 

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How to reduce IRS Penalties and Interest

A taxpayer can negotiate a decrease in the total amount of tax debt owed by seeking a decrease for interest and penalties.

The IRS calls this abatement and it can substantially reduce the tax debt. Abatement is a correction for taxpayers not responsible for the lateness of their tax payment.

The IRS grants to reduce penalties and interest for the following reasons:

  1. Reasonable cause (examples: death or serious illness in the family or prolonged unemployment),
  2. IRS fault (examples: an error or delay that let to a correction)
  3. Administrative waiver (example: government directive to provide natural disaster relief).
  4. 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. Relying on the help of a tax problem expert, can increase  significantly the chances of obtaining a favorable resolution.

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.


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Reducing IRS Penalties and Interest

A taxpayer can negotiate a decrease in the total amount of tax debt owed by seeking a decrease for interest and penalties. The IRS calls this abatement and it can substantially reduce the tax debt. Abatement is a correction for taxpayers not responsible for the lateness of their tax payment. The IRS grants abatement for the following reasons:

  1. Reasonable cause (examples: death or serious illness in the family or prolonged unemployment),
  2. IRS fault (examples: an error or delay that let to a correction)
  3. Administrative waiver (example: government directive to provide natural disaster relief).
  4. 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. Relying on the help of a tax problem expert, can increase  significantly the chances of obtaining a favorable resolution.

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.