Struggling to pay back taxes with penalties rising without end? You might be able to get tax relief with IRS penalty abatement. The IRS notices when you are late in paying or filing taxes. Late-filed returns, late payments, and unpaid balances all face different penalties. If you’re not making payments on your outstanding taxes, these penalties can add up very quickly. The good news is that IRS penalty abatement can help you if you’re struggling to pay down your tax bill because of penalties. There are several specific situations that can qualify a taxpayer for IRS penalty abatement. One possible solution to qualify for penalty abatement is called reasonable cause. While it’s possible for many people in certain circumstances to benefit from IRS abatement of penalties, it doesn’t apply to everyone. Getting help from a tax resolution services firm can increase your chances of an outcome more favorable to you in dealing with the IRS. If you’d like to see if you can apply for IRS penalty abatement, call the experts at Best Tax Pro.
Some of the most obvious reasons for granting penalty abatement are death, severe illness, or unavoidable absence. These three big reasons apply to both a taxpayer or any member of a taxpayer’s immediate family.
Corporations can also receive IRS penalty abatement for the same reasons listed above. If something happens to a taxpayer of a corporation that has the sole authority over tax dealings, that company could possibly qualify for penalty abatement. The reasons for corporations to be eligible for penalty abatement are:
– An immediate family of a taxpayer who has the sole authority over tax dealings for a corporation suffers death, severe illness, or unavoidable absence.
Even if more than one person handles tax matters for the corporation, the IRS may still consider penalty abatement. However, the IRS will look deeply into why the other person who was left in charge of dealing with taxes didn’t handle filing taxes on time or paying taxes on time.
When a corporation is requesting penalty abatement, a tax resolution expert can be a huge help. Best Tax Pro employs former IRS Revenue Agents and tax attorneys, both of whom have an intimate understanding of how tax law applies to corporations for penalty abatement.
- We will discuss your individual case with you to determine how strong your case is before we begin our process. We make no false claims that every case is a winner and we do not want you to feel like you are spinning your wheels.
- Some cases simply do not fit the strict criteria used by the IRS. We will make an initial determination based on the strength of your case and review the likelihood of your success.
- Once we interview you and discuss our professional opinion with you, if we feel your claim has merit, we will proceed.
- We will then have you do the following:
- Thoroughly write your fact pattern and assemble your documents that support your claim together so that it fits your timeline.
- To further support your case, get statements from other people, employees or professionals.
- Forward your narrative to us for us to review and we will offer any recommendations or corrections that may better ensure your success.
- Once we are satisfied, we will file the abatement of penalty request. In our communications with the Internal Revenue Service, we will negotiate to settle your case.
- If for some reason the abatement of penalty request was denied, file an appeal with the Appeals division of the Internal Revenue Service and continue fighting for abatement of the penalty imposed upon you.
- The date that the act of noncompliance had to be completed
- The event that prevented you from being compliant
- The date of the event that prevented you from being compliant
- How soon after the event prevented you from being compliant, did you become compliant with filing and/ or paying your taxes?
- A complete historical account of the event
- What specifically happened and when did it happen?
- During that period, why did you not comply with filing or paying your taxes?
- What facts and circumstances prevented you from timely filing and paying your taxes?
- Who else can verify your fact pattern? This is where the statements from other people, employees, or professionals can come in handy!
- What substantive documentation do you have to prove your claim?
- Do the timelines (yours and the timeline of the penalties and interest) coincide?
- Have you been compliant (timely filed your taxes) for the prior and subsequent tax years?
- The five primary reasons upon which your abatement request may be based are found in the Internal Revenue Manual.
|Abatement reason||Explanation||Oral or written advice by IRS on a tax return position that taxpayer reasonably relied on|
|Statutory exception||A specific exclusion from a penalty that is defined by law||Disaster area relief, combat zone relief|
|Appeals – hazards of litigation||IRS settlement, in an audit, based on likelihood of winning in court||Taxpayer and IRS settle an audit in IRS Appeals that removes an accuracy penalty|
|Administrative Waiver||IRS does not assess or abate a penalty to facilitate tax administration||Hardship failure to pay penalty relief; First-time abatement|
|Reasonable Cause||For late filing and late payment penalties: the taxpayer has circumstances outside of their control that made them unable to comply. For return accuracy penalties, a reasonable attempt was made to report the proper amount of tax on a tax return.||Many Reasonable Cause arguments including:
• Long-term illness
• Loss of records
• Reliance on advice
• Honest error
|Correction of IRS error||An IRS error can be any error made by the IRS in computing or assessing tax, crediting accounts, etc.||A math error when manually computing a penalty,
An extension of time to file that did not post to the Master File, or
Any other error, when it can be shown that;
1. the taxpayer did, in fact, comply with the law, and
2. the IRS did not initially recognize that fact.