IRS Penalty Abatement
Facing IRS penalties? McClure & Stewart specializes in penalty abatement, helping you reduce or eliminate fines and resolve tax issues for a fresh financial start.
Understanding IRS Penalty Abatement:
How to Reduce or Eliminate Tax Penalties
When the IRS identifies a tax liability for an individual or business, it imposes penalties intended to deter future non-compliance. These penalties can be significant, often accumulating daily and reaching up to 25% of the outstanding balance per tax period. Additionally, the IRS applies interest to assessed penalties, causing the total amount due to increase rapidly over time.
Fortunately, the IRS provides Penalty Abatement programs for eligible taxpayers, allowing for the reduction or elimination of certain penalties and helping to minimize overall tax liability. While not all penalties qualify for abatement, the most common ones—failure to file and failure to pay—are often eligible.
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Common IRS Penalties
The most frequently assessed penalties include:
Failure to File
Failure to Pay
Failure to Deposit
What is IRS Penalty Relief?
To help taxpayers, the IRS offers Penalty Abatement and Relief, granting administrative waivers under specific conditions that can significantly reduce or remove penalties for:
- Late filing
- Late payment
- Failure to deposit taxes
By submitting a formal request for penalty abatement, you can proactively address these charges, present supporting documentation or justification, and potentially mitigate or eliminate associated fees. McClure & Stewart had one business client that was assessed $740,000 in non filing penalties, upon demonstrating a reasonable cause for the filing failure, we were able to reduce those penalties to $22,000.
Two Types of Penalty Abatement Relief
1. First-Time Penalty Abatement (FTA)
Taxpayers with a history of compliance may qualify for a one-time penalty waiver if they meet the following criteria:
- Filed all required tax returns on time for the past three years.
- Paid taxes on time during the same period.
How to Request FTA:
Requesting First-Time Penalty Abatement is a straightforward process. In many cases, taxpayers can call the IRS directly, and if eligible, receive the abatement during the call.
2. Reasonable Cause Penalty Abatement
For taxpayers facing extraordinary circumstances, Reasonable Cause Penalty Abatement may provide relief.
Qualifying Circumstances Include:
- Natural disasters
- Severe illness
- Fraud or other events beyond your control
To qualify, you must demonstrate that the situation was beyond your control or you acted as any reasonable and responsible person would under similar conditions.
What You’ll Need:
Provide well-documented evidence, such as medical records, insurance claims, and police reports.
Keep in mind
The IRS reviews of penalty abatement requests are highly subjective, so ensure your explanation and documentation are thorough. Point out how you acted reasonably, what is considered common practice for your filing, and how something outside of your control prevented you from filing or paying your taxes.
call us todayTake Control of IRS Penalties
Navigating IRS liabilities can feel overwhelming, but penalty abatement can ease the financial burden and help you move forward with confidence. Understanding your options and taking proactive steps can save you time, money, and stress.
Fill out our contact form today for expert assistance in resolving your outstanding penalties and regaining financial peace of mind.
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