About IRS Tax Penalties
IRS Automated Penalty Notices
In the case of penalties, the IRS will automatically send a computer generated penalty notice. The letter will inform the taxpayer about how much of a fine they owe as a penalty, along with the reason for the penalty. Almost all penalty notices are based on a mathematical formula carried out by the computer without the involvement of any humans. Thus, when receiving a penalty notice, it’s the taxpayer that holds the upper hand as they know the full reason of the cause rather than the IRS. If a taxpayer can provide a valid argument as to prove that computer generated penalty notice is wrong, the IRS might be more than willing to abolish the penalty.
IRS Penalty Statistics
In only 2009 alone IRS evaluated 36,228,339 penalties in contrast to individuals, partnerships, corporations, businesses, trusts, and real estates. Out of this massive number, less than 15% 5,140,094 penalties were declined. This is a very disappointing fact considering how hardworking and honest the American people are, and they should not have been penalized in the first place.
Even the IRS has accepted the fact that the penalty system is designed to nurture the voluntary compliance of the taxpayers. Thus, if a taxpayer can come up with any valid argument or reasonable explanation to counter the penalty, the IRS is likely to abolish the penalty.
How Long does a Taxpayer have to Request a Revoke of Penalty
Though there might not be a specified time limit for you to take action against a penalty, if you take too long the IRS might launch a collection of fines action or begin the penalty assessing process. After you have delivered the fine money to the IRS you will have a 2 year time period to file for a refund.
Modes of Communication a Taxpayer Can Use to Request a Revoke of Penalty
The 2 common ways to contact the IRS to revoke a penalty are over the phone or through written communication like an e-mail or letter with the IRS. Keep in mind that an written e-mail or letter is the better option as a phone appeal is highly unlikely to succeed. Similarly, if you contact an IRS agent through a phone to revoke a penalty you will be told to write a letter to the IRS. By using the e-services that most tax professionals have on hand to send an e-mail would be a great idea as the IRS responds faster to e-mails than regular letters.
In case of the Original Penalty Revoking Request Being Denied
In the case of your request to revoke your penalty has been denied, you will receive a 30 day or less trial period in which you can file a formal appeal to the IRS’s office of appeals. After the time window has expired the IRS will proceed to the collection of the fine.
It is a good idea to request a meeting with the tax payers representative or hold a conference call where they can talk with the agent, along with their representative, as to why the original request was denied and debate the issue.
The Best Opportunity
Drafting a strong, well thought, and precise letter is the best way to request a revoke of penalty for the IRS from the very beginning. When writing the letter, emphasize on providing a valid reason of why you couldn’t comply with the regulation and tax code of the IRS.
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