Getting Rid of IRS Tax Penalties

Tax Settlement: Settling Your Taxes by Getting Rid of IRS Tax Penalties

The IRS charges taxpayers different types of penalties, some of which include:

  • Failure to file a tax return penalty
  • Penalty for late payment
  • Penalty for failing to make federal tax deposits

The IRS may waive or reduce some of these penalties if the taxpayer shows a reasonable cause for his or her failure to pay. The IRS has strict guidelines for granting penalty abatements; these guidelines are referred to as the ”reasonable clause criteria. The process of waiving such penalties is referred to as the penalty abatement process. Even if your penalty abatement is declined you can appeal against the decision to the appeals department of the IRS.

Your application will be immediately denied if you state/mention an insufficiency of funds as the reason for your failure to pay. Note that a lack of sufficient funds, in and of itself, is not considered a reasonable clause criterion. Another reason your penalty abatement may be denied, is that you site economic recession as your reason for failure to pay.

Reasons for failure to file or pay including those involving:

  • Prolonged illness
  • Fires and natural disasters
  • Serious medical issues
  • Loss or destruction of business records
  • Extended Unemployment
  • Substance abuse problems
  • Bad advice from your accountant or financial advisor
  • Bad advice from the IRS
  • Identity theft
 Before requesting for penalty abatement, there are a few facts and questions to be thought about and answered. These are:
  • What prevented you from filing or paying on time?
  • When did it happen?
  • Did the circumstance directly or indirectly affect your ability to file or pay your taxes?
  • After you had dealt with or recovered from the circumstances, did you immediately file or pay your taxes?

If after answering these questions, you feel you stand a chance of penalty abatement, the next thing to do would be to get evidence to back up your claims. For example, you had a serious medical issue that caused the late filing or payment of taxes; you might need to provide a medical report or a letter from a physician with dates corresponding with when you were incapacitated. Other documents that can be provided include police reports or other records that can serve as evidence.

Once you have done this, you can start the penalty reduction process. Start by writing a letter to the IRS agent handling your case. Your letter should explain your situation and state the type of penalties, and the tax periods you wish for them to be reduced on.

We are the penalty abatement experts, so if you feel that you have a case fill out the form to the right of the article for free case review to see if you are eligible in getting rid of your IRS penalties.

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