Reduce or Eliminate IRS Penalties: Tax Penalty Abatement

Tax penalty abatement is a reduction or removal of tax penalties from a tax liability.  From the moment that you are latpriore filing and/or paying your tax return, penalties and interests begin to accrue.  If you haven’t already, you will soon be receiving a notice from the IRS with an assessment of your tax liability.  Not only may the amount of the tax bill be extraordinarily high, but added on penalties and interest make is all seem overwhelming.

The truth of the matter is that anyone can simply request that the penalties and interest on their tax bill be abated.  It is possible to have them reduced or even eliminated altogether.   In order to receive tax penalty abatement, you must provide a reasonable cause.

The IRS defines just cause for abatement in the following seven scenarios:

  • Death or serious illness of the taxpayer or a member of his or her immediate family.
  • Unavoidable absence such as deployment for military service.
  • Fire or casualty resulting in the destruction of business records.
  • Inability to determine the tax because of circumstances outside the taxpayer’s control.
  • Civil unrest or disturbances.
  • Lack of ability to pay the liability, but only if the taxpayer can demonstrate ordinary business care and prudence
  • Other reasons that the taxpayer may show that they exercised ordinary business care but could not comply within the time limits.

To be eligible for tax penalty abatement, you must make the request in writing and should do so immediately upon receiving a notice from the IRS regarding the tax liability.  In the request, you must outline the cause for your request and provide any documentation that supports it.

If the IRS rejects your request for tax penalty abatement, you have other options available to you including filing an appeal or even suing the IRS in US District or Federal Court.  There are strict timelines and guidelines for appealing the process.  A CPA or tax attorney that specializes in back taxes may best be able to assist you in requesting abatement and following through with any necessary appeals.