Tips for IRS Penalty Abatement

Friday, April 27, 2012

IRS penalty fees are brutal. Most tax payers who cannot pay their balances find that the IRS penalty fee is just as harsh as the balance itself. Since billions of dollars each year are collected on just the IRS penalty fees alone, it is important as a tax payer to understand your rights when it comes to IRS penalty fees and how you can try to remove them through a process known as “IRS Penalty Abatement.”

Tip One: Fix Taxes Fast

If you owe past due taxes, it is better to tell the IRS about it now, rather than wait. The longer you wait, the higher the IRS penalty can be. In fact, up to six months past due equals 25% of the balance added on by the IRS penalty. That can be a hefty amount for those who owe higher balances.

Tip Two: File All Returns

Even if you will owe a balance, there are more IRS penalty fees for not filing your tax returns on top of the IRS penalty for an unpaid balance. Therefore, even if you owe, tax professionals all agree that you should file your tax returns and face the IRS penalty then, rather than the larger IRS penalty later.

Tip Three: Get Your Story Right

If you have an IRS audit, you need to ensure that the reasons for not paying or not filing are right and accurate – this can help you avoid further IRS penalty fees. Some conditions the IRS will consider for IRS penalty abatement include:

  • A serious illness or death in the family;
  • Divorce and missing financial records;
  • Absence that was unavoidable during tax season;
  • Being placed in jail;
  • Theft or destruction;
  • Being unable to determine your tax balance due to circumstances that are beyond your control;
  • Victim of bad tax advice;
  • Unemployment;
  • Incorrect advice from the IRS;
  • Taxes or payroll service did not file on time;
  • You didn’t understand the tax law (you must physically prove you attempted to learn it);

No matter what type of IRS penalty you have on your account, getting IRS penalty abatement is not easy. Therefore, hire an expert who understands how the IRS penalty abatement process works. The professionals at My Tax Attorney understand the rules and regulations surrounding IRS penalty abatement and can help you get your case approved. Even if you are denied, My Tax Attorney can help you take care of your IRS balance and prevent further IRS penalty fees from being added on.

Looking for more resources on IRS Penalty Abatement?  The instructions for the relevant IRS Form 843, Claim for Refund and a Request for Abatement, may be helpful to look into.  Google can help you find the answers to a specific question that may have answers that vary by state.  Here’s the Beverly Hills Bar Association as well.